Demystifying the coverage of burglary insurance
While insuring your assets is essential in today’s time, the question of adequate coverage often remains unanswered. This fact is substantiated by the annual report of the Insurance Regulatory and Development Authority of India (IRDAI) for the financial year 2014-2015, which reflects the low insurance penetration in our country and the claims incurred ratio for the general insurance sector.
The insurance gap in the country can only be filled by complete knowledge of coverage and disclosure of facts by the insured. Thus, understanding the minute details of your policy document becomes utterly crucial. And, when it comes to customised policies such burglary and special perils, observations reveal that policyholders often miss out on coverages or pay for a coverage they won’t need.
What is covered under a standard burglary policy?
A standard burglary policy can be classified into three types, namely, total loss, first loss and stock declaration policy. A total loss policy covers for the full value of the property insured, whereas a first loss policy allows a proposer to insure a certain percentage of stocks when the probability of the entire stock being stolen is less.
Thus, under a first loss policy, in case you anticipate that only a certain amount will be burgled, you can opt to insure only the maximum amount you wish to be protected for. Although, it ensures you pay lesser in premiums, the same may back fire in case the losses extend beyond your sum insured.
If your inventory keeps fluctuating the year round, you will need a stock declaration policy. Under this policy, the sum insured will be fixed at the maximum value of your inventory that you anticipate to hold at any point of time.
Such policies cover the loss or damage caused to the property only by forcible and violent entry into the premises as under the definition of ‘Burglary’. Damage caused by any other means is not covered and the compensation provided will be to the extent of the basic value of the property, subject to maximum limit.
What is excluded from a standard burglary policy?
The insurer will not be liable for the theft of luxury watches, jewellery, money, gold, precious stones, drawing artefacts, etc. unless these are specifically insured. The insurer will also be not liable for the loss if the damage is caused by insured or any member of insured's household or staff.
Besides, the policy ceases to exist if:
- The property is left uninhabited for more than a week
- The material is positioned at a relatively riskier place
- The interest of the insured has passed on to another person through will or operation of law
How to make a claim?
In the event of a theft or burglary, you should immediately report the police and also notify the home insurance provider within a period of 14 days to submit your claims for the loss or damage sustained. Any claim notified beyond the stipulated period will be rejected by the insurance company.
You must also co-operate with the insurer in providing relevant information and evidence to process your claims faster. Lying or hiding facts while recording statement will delay your claim and might even result in rejection also.
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