Theft Extension In Burglary Insurance Policy

1. What is Theft?

When we find something that belonged to us missing, we at times presume it was taken away without our permission by someone dishonestly. The term that we use in our day to day language for this incident is - that a theft has been committed.

Insurance as we understand is a process using which, such unforeseen incidents can be compensated. Before we go into the various methods by which insurance can help in compensating losses suffer due to theft, let us first also look at the legal definition of Theft & a related term - Robbery in IPC (Indian Penal Code).

Section 378. Theft

Whoever

• intending to take dishonestly
• any movable property
• out of the possession of any person
• without that person's consent,
• moves that property in order to such taking, is said to commit theft.

We can see the commonality in the legal definition and the common sense understanding that we have of the term; of course with some additions in IPC definition. One interesting addition here is the concept of “moveable property”. So, a tree growing on land is immoveable but when cut & separated from earth is moveable (Expl. 1)

Hence a building & Plant & Machinery fixed in foundation can not be covered by Theft insurance but a Lap top or mobile phone can be.

It is important to keep the IPC definition in mind, so that we can understand the different insurance covers available for covering theft and other variations of it

Section 390. Robbery

In all robbery there is either theft or extortion.

When theft is robbery.—Theft is "robbery" if, in order to the committing of the theft, or in committing the theft, or in carrying away or attempting to carry away property obtained by the theft, the offender, for that end voluntarily causes or attempts to cause to any person death or hurt or wrongful restraint, or fear of instant death or of instant hurt, or of instant wrongful restraint.

When extortion is robbery.—Extortion is "robbery" if the offender, at the time of committing the extortion, is in the presence of the person put in fear, and commits the extortion by putting that person in fear of instant death, of instant hurt, or of instant wrongful restraint to that person or to some other person, and, by so putting in fear, induces the person so put in fear then and there to deliver up the thing extorted

Thus we can see that theft is an essential part of a crime to be considered as robbery.

2. Insurance covers for Burglary, Robbery & Theft

We have looked at the two offences against property as defined in IPC. Interestingly, Burglary is not a term defined in IPC but used in insurance policies. As may be obvious by now, the term builds on the concept of Theft as defined in IPC.

• Burglary cover (theft+ violent entry/exit from premises) The definition of Burglary in Insurance policy combines the definition of Theft with use of violent means to enter or to exit the premises.
  “Burglary means the unforeseen and unauthorised entry to or exit from the Insured Premises by aggressive and detectable means with the intent to steal Contents therefrom.”
• Robbery cover (theft+ violent means against employees) The insurance policy defines Robbery as “the theft of Contents at the Insured Premises using unforeseen, aggressive and violent means against the Insured’s Employees.”
  Again the two components of theft & violent means are combined here in the definition with additional element of use of the violent means against the employees of Insured
• Theft cover
  1. In a policy covering a commercial premises, only theft is almost never covered even as an additional cover. The policies available cover Burglary &/or Robbery.
  2. Some “All risks” policies offer insurance for “all” risks (other than specifically excluded). These may cover theft but with exclusions for say inventory losses (for which no causation can be proved).
  3. However policies for individuals offer both theft & burglary in say:
     
     1. a Householders’ insurance,
     2. a vehicle insurance policy or
     3. an “all risks” policy for valuables.

“Burglary means the unforeseen and unauthorised entry to or exit from the Insured Premises by aggressive and detectable means with the intent to steal Contents therefrom.”

The insurance policy defines Robbery as “the theft of Contents at the Insured Premises using unforeseen, aggressive and violent means against the Insured’s Employees.”

a. In a policy covering a commercial premises, only theft is almost never covered even as an additional cover. The policies available cover Burglary &/or Robbery.

3. What is covered by Insurance policy

• Legally speaking, an attempt at a crime is treated on same level as a crime. Similarly the Insurance policy covers both theft/ burglary as well as any attempt for same
• The loss/ damage to moveable contents is paid (indemnified) by the policy
• Any damage to the property ( like door/ windows/ locks) is also covered
• Reasonable cost of minimising the loss is also payable

* Add on options

• In addition to the normal fixed value policies, a burglary policy can also be taken on
  1. Declaration basis ( like a Fire declaration policy)
  2. Floater policy ( as in Fire policy)
• For goods at Ports etc, a policy on First loss basis (covering a specific percentage of total value) can be offered

4. What is not covered in Insurance policy

Apart of the standard exclusions of War, radioactivity etc., the policy does not cover

• Valuables unless specifically covered
• A loss in which the Insured or any employee is specifically involved
• Loss due to use of a duplicate key ( unless the key has been obtained by actual/ threatened violence
• Of course the Sum Insured (values mentioned in the policy) are the maximum limit of cover under the policy.
• For specific items eg Jewellery etc., the policy may have a specific sub-limit

5. Who can/ should get Insurance cover

Both individuals & commercial establishments should take this policy for coverage of their moveable assets.

The burglary/theft (in some cases) can be availed in different policies:

• Householder/ Shopkeeper package policy tailor made for individuals/ small commercial establishments
• Vehicle insurance- both two & four wheeler
• All risks- a very wide cover for valuable- generally given on selective basis
• Industrial All Risks policies for larger Industrial units.