Scope & Coverage

What it covers

Burglary insurance protects against loss of or damage to property caused by burglary and housebreaking. In policy terms that means theft following actual, forcible and violent entry into, or exit from, the insured premises. Policies are issued for shops, offices, warehouses and other business premises.

Cover applies to the property declared: usually stock-in-trade, furniture, fixtures and other contents. Cash, jewellery and other valuables are covered only where the policy specifically includes them. Wordings differ between insurers, so the policy schedule decides what is covered.

The forcible entry test

The policy does not cover every theft. There must be physical evidence of forcible and violent entry or exit, such as broken locks, cut grills, damaged doors or tunnelling. Witness testimony and CCTV footage help, but they are not the requirement; the marks of a break-in are.

Three exclusions follow from this test. Simple theft without forced entry is excluded. Theft by, or with the connivance of, the insured's employees or household members is excluded; employee dishonesty is the subject of a separate Fidelity Guarantee policy. Unexplained disappearance, shortages found during stocktaking and mysterious losses are also excluded, because nothing shows a break-in.

Under-insurance and the first-loss alternative

Where the sum insured is lower than the actual value of the property at risk, the average clause reduces the claim in proportion: claim = (sum insured ÷ actual value) × loss. The insured bears the rest.

A first loss policy takes a different route. It can suit large warehouses or godowns where the maximum probable loss in one burglary is much less than the total stock value, because burglars could not practically carry away everything. The sum insured is set at that maximum probable loss, which reduces the premium.

After a burglary

Policy conditions require the insured to report the loss to the police and notify the insurer promptly. Leaving the scene undisturbed until the police have inspected it preserves the evidence of forced entry on which the claim depends.

The First Information Report is the key document. Insurers treat the police report as the primary proof that the theft occurred and was reported, and a claim without it is very hard to establish.

Rules at a glance

Key points

• A burglary policy covers theft following actual, forcible and violent entry into or exit from the insured premises.
• Physical evidence of forced entry or exit is the basic requirement of a claim.
• Theft by employees or household members is excluded and belongs under Fidelity Guarantee insurance.
• Stocktaking shortages and mysterious disappearance are not covered.
• Under the average clause an under-insured loss is paid in the proportion of sum insured to actual value.
• The police and the insurer are informed without delay, and the FIR is the key claim document.

Common misunderstandings

• Burglary insurance is not theft insurance in general: a theft with no forcible and violent entry or exit is excluded.
• CCTV footage does not replace the forced-entry requirement: it supports a claim, but physical evidence of the break-in is what the policy requires.
• Tidying up before the police arrive works against the insured, because it removes the evidence of forced entry that the claim depends on.
• Cash and jewellery in the premises are not automatically insured: they are covered only where the policy specifically includes them.

Questions people ask