TOPIC ONE - Burglary

8/6/2019 TOPIC ONE - Burglary

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BURGLARY

INSURANCE

TOPIC ONE


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INTRODUCTION

y Burglary Insurance indemnifies the insured against loss ordamage to property insured by theft accompanied by theactual forcible and violent breaking into or out of the premisesor any attempt thereat. Damage to premises due to such theftor attempt thereat is also covered.

y Theft can be defined as:-a) According to Penal Code A person is said to commit theft when

intending to take dishonestly any moveable property out of thepossession of any person without consent and moves that moveableproperty.

However, insurer did not use the definition of theft appeared in Penal Codebecause it is too wide and too extensive. For examples; it includes lossesfrom shoplifting and pilfering which are generally regarded as uninsurable.


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y Thus, in Burglary Insurance, theft is defined as the feloniousextraction of the property insured from the premises by aperson/ persons making felonious entry or exit by actual forceand violence. There shall be visible marks made upon thepremises at the place of such entry or exit by tools, explosives,

chemicals, or electricity.

y However, it does not cover entry into the premises:a) By a key; whether an original or duplicate.b) By a trick

c) By secretion in the premises, i.e. whilst open for business because thethief enters legitimately

*Unless the thief subsequently makes his exit by forcible and violent means


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y For hazardous risks i.e. property/ premises which are poorlyprotected / lighted/ no security system or risks in theft prone area,the insurer will use the more limited form of cover and the wordingwill be amended as read as:-

Theft following forcible and violent entry

This restricts the cover since the manner of the exit becomes immaterial (onlymanner of entry is important). For examples, the above wording would notinclude secretion and subsequent exit whether the latter was forcible or notbecause the manner of entry is not by forcible/ violent.

y

Premises is that which is specified in the schedule of the policyexcluding (unless specially mentioned):-a) Any garden, yard or open spaceb) Any stable garage, outbuilding or other building not communicating with the

main premisesc) Any other appurtenances


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SCOPE OF COVER

1. Loss or damage to the property insured by theftaccompanied by the actual forcible and violent

breaking into or out of the premises or any attempt

thereat.

2. Damage to the premises due to or consequent uponsuch theft or attempt thereat. However, the damage

to the premises is normally limited to 5% of theTotal Sum Insured.


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SUBJECT MATTER

1. Usually moveable items which are considered ashigh value and target risk of thieves. Examples:Household items such as camera, laptop, television,

radio etc and business operation items/equipments such as machinery, etc.

2. Premise which the insured is responsible to repair

the damage as a result of the theft or attemptedtheft of the above properties.


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BASISSUM INSURED

1. Full Value Insured This is basis adopted when there is a high possibility that the

entire insured property being stolen at the same time.

Here, the sum insured will be based on the value of the entire

property at risk. The proposer must insure his property for the full value so as to

ensure adequate indemnity at the time of loss.

This basis is subject to the Average when theSum Insured is lessthan the Actual Total Value at the time of loss (SI


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2. First Loss Basis This is basis adopted when it is highly impossible for the entire property to be

stolen at the same time, i.e. thief may not take way property which is too bulkyor heavy.

This basis will be suggested when the full value of risk is very large- thus willbe issued for an amount less than full value.

Here, the sum insured shall be based on the maximum probable loss MPL(the maximum amount of loss expected to be sustained in the event of i.e.housebreaking).

The proposer must declare the full value of property at risk (for the purposeof determining sum insured /MPL/ premium/ claim payment)

This basis is subject to the Average when the Declared Value is less than theActual Total Value at the time of loss (DV


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PREMIUM RATING

1. Naturally varies with the degree of theft hazard asmitigated by the protections provided (alarmsystem, security guard, etc).

2. But, generally the highest rates will be applied tothose risks which are concerned with property

which have high value.


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EXCLUSIONS

1. Loss/ damage to property more specifically insured under another policy i.e.motor vehicles or plate glass.

2. Loss/ damage to property such as money, coins, medals, securities, stamps,stamp collection, jewelry, watches, furs, precious metals, precious stones,documents, business books, manuscripts, curious, sculptures, rare books, plans,patterns, moulds, models or designs, tobacco, cigars, deeds, bonds, bills ofexchange, promissory notes, cheque; UNLESS specially mentioned as insured inthe policy.

3. Loss /damage to property occasioned by any person lawfully in the premises (i.e.shoplifting or pilferage) OR any member of the insureds family, staff, employeeor domestic servant (collusion).

4. Loss /damage to property arising from unoccupancy for along period (usually fora period exceeding 30 consecutive days).

5. Loss/ damage to property resulting form a safe/ strong room being opening by akey obtained through its having been left on the premises whilst closed forbusiness hour.


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6. Loss/ damage to property arising while the premises are in theoccupation of a sub-tenant.

7. Loss/ damage to property caused by fire, explosion, lightning,earthquake, war risks, nuclear risks, riot or civil commotion,

radioactivity, flood or storm.

8. Loss/ damage caused by the act of cheating, i.e. fraudulently ordishonestly induce someone in obtaining the property.

9. Loss/ damage caused the act of the criminal breach of trust, i.e.

dishonestly uses or disposes entrusted property and in violation ofany direction of law which such trust is to be discharged.

10. Any consequential loss


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UNDERWRITING CONSIDERATION

1. The Proposer Is the moral hazard above suspicion; i.e. carelessness andprevious claims history.

2. Nature of Premises:-a) Location; i.e. considered hazardous for premises located in isolated or areas prone to

theft.

b) Construction; i.e. considered hazardous for premises with inferior construction.c) Protection; security guard, burglary alarm system, etc.d) Occupation; whether occupied or not i.e. acceptable if the insured or someone other

responsible person sleeps in the premises.

3. Property to be Insured whether it is attractiveness to thieves/ whetherit is readily removable/ whether it is highly value/ whether stock

inventory records are maintained properly/ whether it is insurable / etc.

4. Sum Insured on the property; i.e. whether it will be based on full value orfirst loss basis.


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CONDITION

1. Notice/ communication with the insurer must be made inwriting i.e. in the event of claims, claims form must beused.

2. Insured must take all reasonable precautions for the safetyof the property AND exercise reasonable care in theselection and supervision of employees.

3. Principle of Contribution will be applied when the insured

has more than one policy which covers the same risk.

4. Insurance policy will be inoperative in the event of anymisrepresentation and fraudulent done by the insured.


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5. All lost property for which the insurers pays becomes theirproperty; but the insured can reclaim it on refunding theamount paid by the insurer (Principle ofSubrogation).

6. Average will be applied if the actual total value of theproperty at the time of loss be collectively of greater valuethan the sum insured.

7. Cancellation of policy during the period of insurance can bemade either by the insured or the insurer. Certain

conditions will be applied in refunding the premium paid.

8. All differences or argument regarding the amount to be paidin the event of claim will be referred to an arbitrator(arbitration).


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CLAIMS PROCEDURE

1. Insured must give immediate written notice to the insurerand also notify the policy.

2. Insured must take all practicable steps to discover the guiltyperson and to recover the stolen property.

3. Insured need to furnish evidence and proofs as required bythe insurer.

4. At the request of the insurer, the insured need to take steps

in punishing the guilty party.

5. The insured must abstain form fraud or intentionalexaggeration of claims.


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WARRANTY

1. Burglar Alarm Warrantya) Burglar alarm must be installed at the premises.b) It must be inspected, maintained, efficient and kept in working order during the currency

of the policy.c) No liability shall attach to the insurer unless this warranty has been carried out.

2. Safe Key Warrantya) Applicable for premises that require protection of safe.b) The insured must keep the key or code of the safe properly.c) No liability shall attach to the insurer if safe is opened by key or combination code left on

premises when closed for business.

3. Premium Warrantya) Premium must be paid by the insured and received by the insurer or his authorized

agent/ broker within 60 days from the inception date of the policy or endorsement orrenewal certificate.

b) If not complied with, the insurance contract is automatically cancelled.


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ENDORSEMENT

1. Full Theft Endorsementa) Extent to include theft not accompanied by actual violent and

forcible entry and exit from the insured premises i.e. entry viaopen doors or windows.

b)

Additional premium will be charged and excess will be imposed.c) Additional or effective protection and security at the premises

must be installed and used by the insured.

2. Armed Robbery/ Hold-Up Endorsement

a) Extent to cover risk of armed-robbery or hold-up within theinsured premises.

b) For example, theft accompanied by assault or violence or the threatof it to the insured or his employees; irrespective of whether thereis forcible entry or not.


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Documents

TOPIC ONE - Burglary