Despite any security measures you might have, the risk of your business getting burgled and your stock, machinery, and other commercial assets getting ransacked is very real. Burglaries can happen at any time, and can result in decreased profitability and fallen morale.
If your business holds large amounts of goods, machinery or stock at a godown, office or factory, you should consider adding Burglary and Theft Insurance to your property insurance package. Burglary and Theft Insurance has a policy period of one year, and is usually taken as a supplement to Fire and Allied Perils Insurance.
Burglary and Theft Insurance covers the following assets :
- Machinery and equipment
- Stock and Stock-in-trade
- Furniture, fixtures and fittings
- Electrical installations
- Goods held in trust or on commission for which the insured is responsible
- Assets like computers, devices, etc.
Any loss, destruction or damage to the above mentioned assets will be covered in the event of :
- Burglary (theft that follows forcible and violent entry of or exit from the premises)
- Housebreaking (someone breaking into your business premises for criminal purposes)
- Robbery (theft that is done by use of violent means )
- Hold-up (Forcible removal of possessions by actual or threatened violence against the insured)
Additionally, any damage caused to the insured premises due to the above events will also be covered.
This policy can be taken on a declaration or floater basis as well, allowing you to cover stocks that fluctuate in value over time or are located at more than one location. The Sum Insured for this policy can be taken on the following two bases:
First loss basis - You can opt for this type of coverage if you feel it’s highly unlikely that all of your property will be stolen at the same time. Adopting this approach can greatly reduce the premium you pay for the policy.
Here the property is insured for the maximum probable loss by theft at any one time - meaning, the Sum Insured will reflect the maximum value of your assets that are likely to be stolen in one instance of theft.
For example, a steel godown worth ₹100 Crore would opt for a first loss policy as it is highly unlikely that the entire stock of steel goods would be stolen at the same time.
However, if the loss amount turns out to be more than the sum insured, the excess has to be borne by the insured
Full value basis - Here the property is insured for the actual value. This provides complete protection to all your assets. You can opt for this coverage if you feel there is a high possibility that all of your assets will be stolen at any one time. For example, business properties with smaller aggregate sum insured for, say, ₹4 Lakh should get a full value policy for complete coverage
This policy also comes with some additional built-in benefits :
- Injury during burglary or housebreaking - This policy will cover any bodily injury, death or disability suffered by the insured due to an accident of burglary or housebreaking. However, no compensation will be provided when such death or disablement is aggravated by any pre-existing illness, disease or injury
- Clothing and Personal Effects - Here, insurance cover is extended to otherwise uninsured clothing and personal effects (excluding money) belonging to the owners, partners, proprietors or directors of the insured business against any one event of burglary or theft. The Sum Insured in this case is limited to ₹5,000
- Damage to Safe or Strongroom - If the Sum Insured has not been exhausted, this policy will cover any damage to safe or strongroom due to any one event of a violent theft or burglary. This cover is limited to the remnant sum insured or ₹50,000 whichever is lesser
- Money - Money stored in a securely locked safe or strongroom on the insured premises will be covered up to ₹5,000 for any one event of theft or burglary during the policy period. Money can include current coins, bank notes, currency notes, cheques, credit cards, sales vouchers, negotiable securities, postal orders, money orders, etc.
You can also opt for the following add-ons by paying an additional premium:
- Riot and strike
- Loss minimization expenses
- Expenses towards restoration
- Expenses towards clearance of debris
- Loss or damage to the properties of employees
- Costs for changing locks and for repair of damaged premises
These policy will not cover loss or damage caused by the following:
- War, invasion, act of foreign enemy etc.
- Confiscation, nationalisation etc. by government authority
- Nuclear activity, weapons, waste etc.
- Riots, strikes or civil commotion
- Loss or damage by wear and tear, or gradual deterioration
- Unexplained losses
- Shortages caused by errors or omission
- Consequential loss
- Loot, sack, or pilferage
- Loss or damage which is recoverable under other insurance policies obtained by the insured
- Unoccupancy of the premises for more than a specific number of days as specified in the policy schedule
- Destruction, damage or loss caused by the insured, anyone acting on their behalf, or any member of their family or in their employment
- Inventory or Stock taking losses
Burglary and Theft Insurance is an important policy for establishments like shops, warehouses / godowns, offices, factories, etc. It provides complete protection against theft and can be an affordable option for every shop owner in India.
Burglary and Theft Insurance is often purchased in addition to a Fire Insurance policy, covering a wide range or risks from property damage to robbery.
If you'd like to know more about Fire Insurance, head to our blog here