Canada Travelling Exhibitions Indemnification Program

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Important Notice

Applicants should be aware that indemnification for eligible travelling exhibitions is approved by the Minister of Canadian Heritage, in accordance with the Canada Travelling Exhibitions Indemnification Act. The Act establishes a limit to the amount of contingent liability available to the Minister under the Program. If demand for indemnification exceeds the limit of liability authorized by legislation, selection among eligible applications may be based on a combination of approaches and factors such as: limiting applicants to one travelling exhibition per fiscal year; allocating priority to domestic exhibitions; allocating priority based on the number of Canadian venues; achieving regional balance; or the financial value of an eligible exhibition in relation to available liability.

This list of factors is not exhaustive and may vary from one approval cycle to the next depending on the level and composition of demand for available liability. The Minister retains complete discretion to approve or reject applications for indemnification.

Introduction

In 1999, the Government of Canada established the Canada Travelling Exhibitions Indemnification Program within the Department of Canadian Heritage. Indemnification is a process through which the government assumes financial risk, and provides compensation for damage or losses, should these occur. Through the establishment of the Canada Travelling Exhibitions Indemnification Program, therefore, the Government of Canada assumes the financial responsibility for loss or damage to objects and appurtenances in eligible travelling exhibitions.

The Program has two objectives: first, to increase access for Canadians to Canada's and the world's heritage through the exchange of artifacts and exhibitions in Canada; and second, to provide Canadian art galleries, museums, archives, and libraries with a competitive advantage when competing for the loan of prestigious international exhibitions. Both international and domestically organized exhibitions are eligible for indemnification.

For additional information concerning the Canada Travelling Exhibitions Indemnification Program, please contact the Canada Travelling Exhibitions Indemnification Program.

Eligibility

Two types of exhibitions qualify for indemnification under this Program:

  • Exhibitions that are organized domestically and shown at venues in at least two provinces within Canada. This encourages the circulation of travelling exhibitions within Canada and meets the government's policy objective of providing greater access to Canada's heritage.
  • Exhibitions where the total fair market value of objects borrowed from sources outside Canada exceeds that of the total fair market value of objects borrowed from inside Canada. Such exhibitions are required to have only one Canadian venue as, through hosting the exhibition, the Canadian public will have access to cultural and heritage objects that would not otherwise be available.

Eligibility is also determined by the value of individual travelling exhibitions. The total fair market value of all objects and appurtenances in an exhibition must be at least $500,000 CDN to be considered for indemnification. Indemnity is limited to a maximum of $600 million CDN per exhibition.

Indemnification coverage for indemnified objects and appurtenances in a single conveyance may not exceed $100 million CDN, because dividing an exhibition during shipping diffuses the concentration of risk. If the value of an individual indemnified object or appurtenance exceeds $100 million CDN, commercial insurance must be purchased for the excess amount while the item travels.

Each Canadian institution that proposes hosting a travelling exhibition for which indemnity is sought must complete a Facilities Report and submit it for approval. The Facilities Report includes assessments of security protection, fire protection, and collections preservation. Once approved, the Facilities Report for each institution will remain on file for five years. The facilities of all Canadian host institutions must be approved before indemnification for a travelling exhibition may be granted.

Deductible

The Indemnification Program provides for a deductible based on the total fair market value of the exhibition. This serves to transfer the risk and cost for lower-value claims to commercial insurers, and establishes a shared responsibility and partnership between host institutions and the Government of Canada in the Canada Travelling Exhibitions Indemnification Program. The deductible covers the entire exhibition, and is not per item or per venue. Commercial insurance equivalent to the deductible may be purchased for each exhibition, or an institution's existing in-house insurance may serve this purpose. If necessary, commercial excess insurance must be purchased to cover the value of objects and appurtenances in an exhibition in excess of the amount indemnified under the Program.

The required deductible is calculated as follows:

Information about the calculation for the required deductible.
Total fair market value of the exhibition ($ CDN)Deductible ($ CDN)
$500,000 to $3,000,000 $30,000
$3,000,001 to $10,000,000 $40,000
$10,000,001 to $50,000,000 $50,000
$50,000,001 to $100,000,000 $75,000
$100,000,001 to $200,000,000 $200,000
$200,000,001 to $300,000,000 $300,000
$300,000,001 to $450,000,000 $500,000
$450,000,001 to $600,000,000 $700,000

Application Process

An institution located in Canada that organizes or hosts a travelling exhibition must submit an application for indemnity on behalf of all institutions that will host the exhibition in Canada. The deadline dates for applications are October 1 for exhibitions requiring indemnification as early as the following January 1, and April 1 for exhibitions requiring indemnification as early as the following July 1. Applications for indemnification will be reviewed, using external expert advice as required, to advise the Minister of Canadian Heritage about the level of risk associated with indemnifying the range of objects and appurtenances contained in each application and whether to assume that risk in whole or in part.

An application should not be submitted more than one year in advance of the requested indemnity period. However, to assist with long-range planning of indemnity allocations, advance notification is encouraged, but not required, about future exhibitions as much as four years in advance of the requested indemnity period. Updated material may be submitted every six months, as appropriate.

Indemnity Agreement

The Indemnity Agreement is a contract between the Minister of Canadian Heritage on behalf of the Government of Canada and an owner, or an owner's designated representative, respecting loss or damage to indemnified objects and appurtenances under the authority of the Canada Travelling Exhibitions Indemnification Act. It pledges that the Government of Canada will pay the agreed upon amount, subject to the specified deductible, in the event of a valid claim for loss or damage to an indemnified object or appurtenance. The Indemnity Agreement includes most standard fine arts policy coverage provisions with some exclusions.

Where the applicant demonstrates that a commitment to indemnity on behalf of the Government of Canada is necessary to finalize a loan or to obtain any of the information or documentation required in the application, a letter of intent may be drawn up. Where a letter of intent has been made, a formal Indemnity Agreement will be entered into only when all the necessary information has been submitted and accepted by the Indemnification Program. An Indemnity Agreement may not be entered into if there are substantial changes to the initial information upon which the letter of intent was based.

Amendments

The Indemnity Agreement is prepared based on the information supplied in the application. A list of approved object(s) and/or appurtenance(s) with its/their value is attached to the Indemnity Agreement. The Indemnification Program must be informed in advance of any changes affecting the time period, venues, list of indemnified objects and appurtenances, and/or the packing, shipping, security, storage, and environmental conditions as stated in the application so that consideration may be given to amending the Indemnity Agreement if required.

To Amend the List of Indemnified Objects and Appurtenances

Requests for additions to the list of indemnified objects and appurtenances must be made with sufficient time allowed for review. For each object or appurtenance to be added, applicants must submit the descriptive information outlined in the application (i.e. artist, title, medium, name of owner, fair market value). Requests for additions to the list will not be approved after the time period of indemnity has begun. The Indemnification Program must be notified of any deletions from the list so that the amount of the Indemnity Agreement may be reduced.

To Amend the Period of Indemnity or Places of Exhibition

The maximum time period of coverage for an Indemnity Agreement is two years; however, this period may be extended for an additional year once the agreement is in effect should opportunities for further venues for the exhibition or delays in transit occur. The viability of an extension will depend on the availability of the indemnity limit: in other words, the balance of available risk must not have been "used up" by other travelling exhibitions during the proposed extension period.

Requests for changes in time period or in participating institutions must be made with sufficient time allowed for review. A revised application must be submitted that includes all relevant changes (i.e. revised dates of exhibition, transit arrangements, Facilities Report, loss record, for each new venue).

Condition Reporting

Progressive condition reporting is fundamental to the operation of an indemnification program. Condition reports are crucial factors in establishing the time, place, cause, and extent of any loss or damage. It is any difference between the first condition report (when the object or appurtenance passes into the care and control of a participating Canadian institution) and subsequent condition reports that may legitimately be the subject of a possible claim.

The first condition report establishes baseline information that may be used to determine the cause and extent of damage and the amount of depreciation incurred. This report must be filed with the Indemnification Program within 15 days after a participating institution assumes responsibility for safeguarding an indemnified object or appurtenance.

Subsequent condition reports must be prepared each time indemnified objects and appurtenances are packed and unpacked during the period in which an Indemnity Agreement is in effect. If there is loss or damage to an object or appurtenance that is subject of an Indemnity Agreement and a claim is filed, the claim must be accompanied by all condition reports that have been completed in respect of the object or appurtenance throughout the travelling exhibition.

Reporting Damage or Loss

Any instance of loss, damage, or deterioration to an indemnified object or appurtenance during the period of indemnity must be reported to the Indemnification Program within two (2) business days of its discovery, regardless of whether the scale is sufficient to result in a claim under the Canada Travelling Exhibitions Indemnification Program. Since the deductible covers the entire exhibition and is not per item or per venue, each incidence of damage could contribute to a situation that may ultimately result in a claim on the Program, even though the individual incident may be minor enough to be within the deductible amount.

The Program must also be notified of any loss or damage over $5,000 to permanent or loaned (non-indemnified) objects and appurtenances incurred at each participating institution or storage facility from the date of the application for the duration of the indemnity period. The cause of such loss or damage could have an impact on the overall conditions at the institution or facility, which may affect the care and safety of indemnified objects and appurtenances.

Claims

Where a valid claim of loss or damage to an indemnified object or appurtenance exceeds the deductible, the Government of Canada will cover the liability above the deductible. The owner, or the owner's designated representative, must notify the Indemnification Program within two (2) business days of discovery of the loss or damage. A claim must then be filed in writing as set out in section 11 of the Canada Travelling Exhibitions Indemnification Regulations.

For a valid claim, payments will be made through the Minister of Canadian Heritage on behalf of the Government of Canada to the owner, as set out in section 12 of the Regulations. The procedure for resolving disagreements between the parties on the validity of a claim or on the amount by which the fair market value of an object or appurtenance has been reduced is set out in sections 13 and 14 of the Regulations.

No conservation work is to be undertaken on an indemnified object or appurtenance without the consent of the Indemnification Program unless the case is one of extreme emergency. In such cases, only such conservation work as is necessary to stabilize the object or appurtenance to prevent further damage or deterioration should be undertaken.

Acknowledgment

Exhibitions for which indemnification is granted must acknowledge the role of the Government of Canada in supporting and facilitating the exhibition of indemnified objects and appurtenances. Unless it is agreed otherwise, the following acknowledgment must appear in all published material and announcements regarding an exhibition that includes indemnified objects and appurtenances:

"Supported by the Department of Canadian Heritage through the Canada Travelling Exhibitions Indemnification Program / Avec l'appui du ministère du Patrimoine canadien par le biais du Programme d'indemnisation pour les expositions itinérantes au Canada"

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Act

The text of the Canada Travelling Exhibitions Indemnification Act may be found at http://laws.justice.gc.ca/eng/C-10.5/index.html

Regulations

The text of the Canada Travelling Exhibitions Indemnification Regulations may be found at http://laws.justice.gc.ca/eng/SOR-99-467/index.html.