First Loss Basis

In today’s day and age insuring assets has become extremely important but most people are clueless when it comes to the insurance type or coverage amount. The prime reason behind this is the low penetration and importance of burglary or theft insurance cover in India especially in tier 2 and 3 cities. Even in tier 1 cities, most people not know the advantages of having burglary insurance. It’s only when an unfortunate incident happens and they become victims of losing precious assets and incur heavy losses that they realize the importance of having burglary insurance. The insurance gap in India can be filled with adequate knowledge and awareness to people through different mediums of communication.

Theft or burglary insurance offers coverage against any damage or loss to your property or belongings by means of theft or burglary within the premises as mentioned in the schedule of the insurance policy. It is important that every home, factory, warehouse or any other commercial premises having valuable assets should have some type of coverage against the risk of theft or burglary. A standard burglary policy comes in 3 types of a total loss, first loss and stock declaration policy. In this blog, you will learn about burglary policy on first loss basis.


Understanding first loss basis burglary insurance

In the first loss basis of burglary insurance, the coverage is only covered once and that too up to specific amount only. First loss basis burglary insurance is also known as partial insurance as it offers partial coverage on the total value of the goods or property. This type of burglary insurance is usually taken as burglary theft insurance to insure against occurrences where total loss cases are extremely rare. For example – in a warehouse it will not be possible to steal all the goods at one time hence burglary insurance of first time basis is considered more appropriate. So if the total goods amount is for INR 20 crores then the insurance coverage under first loss basis maybe 10% to 12% of the total value of goods or assets that is approximately INR 2 crores.


Advantage of first loss basis burglary insurance

The advantage of taking such time of burglary insurance coverage type is that it keeps the premium amount down as the premium charged is for selected coverage amount only.


Limitations of first loss basis burglary insurance

The flip side of taking first loss basis of burglary insurance is that if for instance if all the goods do get stolen then the insurance company will still pay only till the amount coverage mentioned in the policy schedule. This will leave the goods and property underinsured and the rest of the loss will have to borne by the insured themselves.


Who should consider taking the first loss burglary insurance policy?

First loss burglary insurance policy should be taken by businesses who have a huge amount of stock and low risk of large scale theft.


Conclusion

Hence as per your business and the value of the assets and good involved you may decide whether to choose theft or burglary insurance on first loss basis or not.

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