DEFINITION of 'Consignment Insurance'
A class of insurance that covers loss or damage to items that are on consignment, loan, up for auction, or in the process of transfer. The insurance will pay out only if the damage or loss is incurred while the property is not currently being held, maintained, or cared for by the owner. This is a separate form of insurance from that which covers items held in-house as inventory.
BREAKING DOWN 'Consignment Insurance'
Consignment insurance is part of a broader class of gap insurance policies meant to provide coverage for times and situations where more mainstream policies would not typically pay out. Consignment insurance can cover art that is being loaned out to a gallery, automobiles being sold at a consignment dealership, items under review for auction or transfer of ownership.