Understanding Burglary Insurance & First Loss Policy

Fire and burglary insurance is a plan that allows business owners, corporate entities and individuals to cover the financial losses incurred due to damage to their home or place of business. This includes damages incurred due to fire, theft or other perils listed by your insurance provider.

Whether together in a policy or separately, financial protection against incidents of fire and burglary turns out to be one of the most essential investments in business or home safety.

There are many types of burglary insurance in the market to cater to diverse needs of the people. These plans are carefully designed to offer varying degrees of protection against theft, burglary or robbery.

Understanding the various types of insurance is essential to understand what you need to protect your most valuable possessions. The following are some common types of classification of burglary and theft insurance in India:

Stock Declaration Policy

This type of insurance is commonly owned by businesses involved in trading, warehousing or manufacturing. The policy insures their stock, goods, finished products and other valuable items from theft or burglary.

This policy requires a mandatory Stock Declaration, including the number and value, to be made periodically, often monthly or quarterly, to their insurers. Since the insured amount depends on the current value of their goods, accurate declaration is of utmost importance.

First Loss Policy

This is one of the most common policies in burglary insurance, owned mainly by store owners or businesses where theft or burglary will rarely cause damage to the entire goods.

The policyholders of the First Loss policy select a fixed amount as the sum insured, which is the maximum amount they receive from their insurer, which, in turn, covers significant financial losses.

They are often preferred by policyholders who find it difficult to determine the exact market value of their goods or find the full coverage to be too high.

Full Value Policy

This type of policy offers full coverage for your insured property, goods or assets. This is a comprehensive policy that, unlike the First Loss policy, covers the financial losses of the total value in cases of theft or burglary.

Since it offers the maximum protection, the premiums are higher and often preferred by businesses that require coverage for all their assets.

To understand what is protected under your robbery insurance, knowing about the inclusions and exclusions is a must. Here is a brief overview of general inclusions and exclusions:

Inclusions

• Loss or damage to the contents (which are not attached to the premises) during the burglary.

• Damage to the premises as per your policy terms.

• Repair or replacement of locks, keys, safe or a strong room as per your policy terms.

• Damage to assets or equipment other than stocks.

• Theft

Exclusions

• Jewellery, precious stones or gems, works of art, etc.

• Documents

• A fire caused by any means

• Damage due to natural disasters

• Losses caused due to negligence or deception.

• Loss From Loot, Ransack, Spillage or Pilferage.

• Loss due to premises being left unattended.

The burglary insurance premium depends primarily on the following factors:

• If the assets or property covered under the insurance are exposed to high risk, the premium will increase.

• If the market value of the insured assets or property is higher, the premium rates will also increase.

• If your property is not well-maintained and taken care of, it will affect the premium rates. For example, suppose there are no safety alarms or the assets or property are left unattended. In that case, they are put at higher risk, increasing the premium.

• The absence of CCTV cameras at the place of work or business may encourage burglars to commit theft.

• Not having a fence or a protective boundary around the insured property.

• Having a poor safe or lockers for storing valuables or protecting assets.

• Being negligent with the general safety of your property.

• Providing incorrect information to your insurer while purchasing or claiming insurance.

• Not assessing your assets accurately and choosing the wrong type of insurance. For example, suppose you do not need all your assets covered by robbery insurance. In that case, you can invest in a First Loss Policy and save money on premium costs.

To understand the First Loss policy better and whether it can be helpful, let us go through the pros of the policy and learn how it helps:

• It offers policyholders the flexibility to choose the most valuable assets that need coverage and pay only for what is covered.

• Since the coverage is limited, the premium costs are affordable and much lower than a Full Value policy.

• Policyholders can select the coverage amount depending on the kind of risks they are exposed to.

• It is an excellent option for business owners or individuals with a limited budget to focus and prioritise the assets that need coverage.

• It may also reduce the overall complexity of a claim when compared with other types of policies.

• It allows policyholders to buy insurance even when they cannot make an accurate value declaration of their assets or property.

It is crucial for business owners to invest in burglary and fire insurance policy to safeguard their assets from unforeseen events like fire and theft. To make the best choice, understanding the different types of policies is important.

The First Loss Policy is a cost-efficient option for those who find it challenging to determine the exact value of their assets and do not require overall protection. It helps policyholders to prioritise their valuable assets and purchase insurance only for those, saving them money.

To get the best-in-class solution and affordable premium rates, opt for Tata AIG’s SME insurance. It offers comprehensive coverage and a transparent and quick claim process.