TOPIC ONE - Burglary

BURGLARY 

BURGLARY 

INSURANCE

INSURANCE

TOPIC ONE

TOPIC ONE

INTRODUCTION

y

Burglary Insurance indemnifies the insured against loss or

damage to property insured by theft accompanied by the

actual forcible and violent breaking into or out of the premises

or any attempt thereat. Damage to premises due to such theft

or attempt thereat is also covered.

y

Theft can be defined

as:-a)

 According to Penal Code ± A person is said to commit µtheft¶ when

intending to take dishonestly any moveable property out of the

possession of any person without consent and moves that moveable

property.

However, insurer did not use the definition of µtheft¶ appeared in Penal Code  because it is too wide and too extensive. For examples; it includes losses

y

Thus, in Burglary Insurance, µtheft¶ is defined as the felonious

extraction of the property insured from the premises by a

person/ persons making felonious entry or exit by actual force

and violence. There shall be visible marks made upon the

premises 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.

By a trick 

c)

By secretion in the premises, i.e. whilst open for business because the

thief enters legitimately 

y

For hazardous risks i.e. property/ premises which are poorly 

protected / lighted/ no security system or risks in theft prone area,

the insurer will use the more limited form of cover and the wording

 will be amended as read

as:-µTheft following forcible and violent entry¶

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

y

Premises is that which is specified in the schedule of the policy 

excluding (unless specially

mentioned):-a)  Any garden, yard or open space

 b)  Any stable garage, outbuilding or other building not communicating with the

main premises

S

_{COPE OF COVER} 

1.

Loss or damage to the property insured by theft

accompanied 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 upon

such theft or attempt thereat. However, the damage

to the premises is normally limited to 5% of the

S

_{UBJECT MATTER} 

1.

Usually moveable items which are considered as

µhigh 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 attempted

theft of the above properties.

BA 

S

_I

S S

_{UM IN}

S

_URED

1.

Full Value Insured



This is basis adopted when there is a high µpossibility¶ 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 µAverage¶ when the

um Insured is less

than the Actual Total Value at the time of loss (

_{I<ATV). This}

situation is also known as µunder-insurance¶. Formula for claim

payment:-S

_{UM IN}

_URED

_x

_LO

2.

First Loss Basis

 This is basis adopted when it is highly µimpossible¶ for the entire property to be

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

 This basis will be suggested when the full value of risk is very large- thus will

 be issued for an amount less than full value.

 Here, the sum insured shall be based on the µmaximum probable loss ± MPL

(the maximum amount of loss expected to be sustained in the event of i.e. housebreaking).

 The proposer must µdeclare¶ the full value of property at risk (for the purpose

of determining sum insured /MPL/ premium/ claim payment)

 This basis is subject to the µAverage¶ when the Declared Value is less than the

 Actual Total Value at the time of loss (DV<ATV). This situation is known as µunder-insurance¶.

 Formula for the claim

Payment;-DECLARED VALUE X LOSS

PREMIUM RATING

1.

Naturally varies with the degree of µtheft hazard¶ as

mitigated by the protections provided (alarm

system, security guard, etc).

2.

But, generally the highest rates will be applied to

those risks which are concerned with property 

 which have high value.

EXCLU

S

_ION

S

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 of 

exchange, promissory notes, cheque; UNLESS_{specially mentioned as insured in}

the policy.

3. Loss /damage to property occasioned by any person lawfully in the premises (i.e.

shoplifting or pilferage) OR any member of the insured¶s family, staff, employee or domestic servant (collusion).

4. Loss /damage to property arising from unoccupancy for along period (usually for

a period exceeding 30 consecutive days).

5. Loss/ damage to property resulting form a safe/ strong room being opening by a

key obtained through its having been left on the premises whilst closed for  business hour.

6_.

Loss/ damage to property arising while the premises are in the

occupation 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 or

dishonestly induce someone in obtaining the property.

9.

Loss/ damage caused the act of the µcriminal breach of trust¶, i.e.

dishonestly uses or disposes entrusted property and in violation of 

any direction of law which such trust is to be discharged.

UNDERWRITING CON

S

_IDERATION

1.

The Proposer ± Is the moral hazard above suspicion; i.e. carelessness and

previous 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/ whether

it is readily removable/ whether it is highly value/ whether stock 

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

4. S

_{um Insured on the property; i.e. whether it will be based on full value or}

CONDITION

1.

Notice/ communication with the insurer must be made in

 writing i.e. in the event of claims, µclaims form¶ must be

used.

2.

Insured must take all reasonable precautions for the safety 

of the property AND exercise reasonable care in the

selection and supervision of employees.

3.

Principle of µContribution¶ 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 any 

5.

 All lost property for which the insurers pays becomes their

property; but the insured can reclaim it on refunding the

amount paid by the insurer (Principle of 

_ubrogation).

_.

 Average will be applied if the actual total value of the

property at the time of loss be collectively of greater value

than the sum insured.

7.

Cancellation of policy during the period of insurance can be

made 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 paid

in the event of claim will be referred to an arbitrator

(arbitration).

CLAIM

S

_PROCEDURE

1.

Insured must give immediate written notice to the insurer

and also notify the policy.

2.

Insured must take all practicable steps to discover the guilty 

person and to recover the stolen property.

3.

Insured need to furnish evidence and proofs as required by 

the 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 intentional

 WARRANTY 

1.

Burglar Alarm Warranty 

a) 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. S

_{afe Key Warranty} 

a)  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 Warranty 

a) Premium must be paid by the insured and received by the insurer or his authorized

agent/ broker within 6_{0 days from the inception date of the policy or endorsement or}

renewal certificate.

ENDOR 

S

_EMENT

1.

Full Theft Endorsement

a)

Extent to include theft not accompanied by actual violent and

forcible entry and exit from the insured premises i.e. entry via

open doors or windows.

 b)

 Additional premium will be charged and excess will be imposed.

 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 µarmed-robbery¶ or µhold-up¶ within the

insured premises.

 b)

For example, theft accompanied by assault or violence or the threat

of it to the insured or his employees; irrespective of whether there

is forcible entry or not.

CLAU

S

_E

1.

Book-Keeping Clause

a) In the event of claim, to support the claim, the insured shall be able to produce the

insurer the records i.e. record of all stocks/ goods or record of the detail daily sales.

 b) Such records must be contained the latest information and or transaction.

2.

Pair and

_{et Clause}

a)  Applicable when the insured item consists of articles in a pair or set; i.e. shoe, earring etc.  b) In the event of loss or damage to any particular part of the pair or set item, the liability of 

the insurer shall more than the value of the damaged or lost part.

c) The effect is to limit the insurer¶s liability and to comply with the principle of indemnity.

3.

Market Value Clause

a) In the event of a loss to the property insured, the limit of indemnity shall be based the

insured value or the market value of the insured property ± which is the lower and subject to the deduction of any excess.

 b) Market value mean the value of the property insured at the time of loss less wear and

tear, depreciation or betterment.

c) The valuation of market value will be determined by the manufacturer, authorized agent/