Nirma University

Institute of Law
X Semester, B. Com., L.L.B. (Hons.) Course

Seminar Paper In The Subject Of Insurance Law As A Part Of Continuous Evaluation

Scheme For The Academic Year 2016

On The Topic

CRITICAL ANALYSIS OF THE BURGLARY AND THEFT INSURANCE

Final Submission

Submitted to:

Submitted by:

Mr. Anandkumar Shindhe

Darshil Parikh

Institute of Law, NU

(11BBL082)

Insurance
Risk is part and partial of the life. It becomes very necessary to protect the interest of person
in case of loss due to any risk. Insurance is one of the tool which can be used a guarding tool
against the losses that would occur due to risk. Under Insurance the risk is transferred to
another party generally known as the insurer who would bear the loss in exchange of
insurance premium which is to be paid by the insured to the insurer as an incentive to bear the
loss.
The concept of insurance includes the safeguarding against the risk. Here the insurer provides
insurance to insured person by way of insurance policy. The to be insured person will seek for
an insurance policy from the insurer who will share the risk by taking a certain amount which
can be called as insurance premium. As there are many types of risks involved there are
different kinds of insurance policy available to cover the loss due to that risk. There are
insurance policies for motor/vehicle, medical, life, agriculture, theft, etc.
Under insurance the main aim is to protect the economic value of the assets or life of a
person. It is a kind of contract wherein the insurer agrees to indemnify the loss that occurred
to a property or to loss of life. The basic principles on which insurance works are principle of
utmost good faith, insurable interest, indemnity, subrogation, contribution, proximate cause &
loss of minimization. This are the basic principles on which the concept of insurance is based
upon.
The insurance sector is divided into main two parts one being General Insurance and the
other being Life Insurance. Under General Insurance all the non-life aspects are covered
which are basically Fire, Marine and other miscellaneous which include motor insurance,
liability insurance, health insurance, burglary insurance, etc. Under Life Insurance it deals
with the insurance which are related to life of a person.
In the current paper we will be dealing with the burglary insurance along with theft and house
break-in. To understand the burglary and theft insurance it is necessary to know the meaning
of the term burglary and theft. Burglary is any unlawful entry to a premises with an intention
to commit a crime with use or without using physical force. The term burglary is also
commonly used for the term house break-in. While on other hand theft means taking away
someones property without his/her consent. All the crimes are inter related and it is
necessary to differentiate the same for the purpose of study.

For the purpose of study we are going to refer the Indian Laws to understand the terms
burglary, theft and house breaking along with robbery and dacoits.
-

Burglary:
In India there is no law or provision which defines the term burglary. But for
the general understanding the term burglary is defined as the act of illegally
entering a building in order to steal things1.
From the above definition the term burglary can be understood as following:
(a) Illegally entering ones premises by using force and means which is
followed by stealing of property.
(b) A person committing an offence of theft by illegally entering someones
premises (trespassing) who breaks out by violent and forcible means where in
there shall be the marks of the force used which may be against a person or
property.

Theft:
Section 378 of the Indian Penal Code defines the term theft as "whoever
intending to take dishonestly any movable property out of the possession of
any person without the consent of that person or of any person having for that
purpose authority, moves that property in order to such taking is said to
commit theft."2

House-breaking:
As stated earlier the word house-breaking is similar to burglary. But the term
housebreaking is defined under section 445 of the Indian Penal Code, 1860,
as follow:

1 As per Merriam-Webster
2 Section 378 of Indian Penal Code, 1860

A person is said to commit housebreaking who commits house trespass if he

effects his entrance into the house (or any part of it), or if being in the house
(or any part of it) for the purpose of committing an offence, or having
committed an offence therein he quits the house, or any part of it in any of
such six ways..3 The six ways are discussed in the Indian Penal Code.

Now that we have understood the meaning of the terms we will understand what Burglary
and Theft Insurance means.

3 Section 445 of Indian Penal Code, 1860

Burglary and Theft Insurance

A burglary insurance is generally offered for a house or for a business enterprise. The main
aim is to protect the premise and the property which is inside that property. It covers valuable,
cash, securities, etc. which are present in the property and are covered under the policy as per
the terms and conditions of the policy. It also includes the goods present in the premise which
are given for the custody. In case of burglary insurance there are many things covered under
the policy but the scope of the same is widened or narrowed as per the terms and conditions
of the policy and risk attached to that property or premise.
In case of burglary insurance the policy not only covers the property in the premise but it also
covers the property itself meaning hereby that if a person tries to break into a property and
while doing so if he damages the property then that can also be covered under the burglary
insurance. It is not mandatory that the burglary or theft should happen even in attempting the
same someone damages the property or premise then that can be covered under burglary
insurance policy.
Under burglary insurance, the premium amount of the insurance policy is decided as per the
nature of property and the contents in it and scope of risk involved in it. If the scope is wider
the premium would be high and if the same is narrow then the premium would be less.
The insured person is entitled under the policy to the extent of the actual damage or actual
loss which is caused due to burglary or house breaking. But the same is restricted to the sum
insured. If the sum insured is less than the actual loss/damage then the insured person is
entitled to the extent of sum insured or proportionately. Thus the insured person must take
care about the value of the property, which is covered under the policy, that there is no
underinsurance.
The burglary insurance does not generally extend up to the loss caused due to riot or strike or
malicious damage but the loss due to the same can be covered under the policy by paying
higher premium. The same is the case with loss that occurred due to goods held in custody or
under trust, jewellery, business books, etc. The same can be covered under the policy by
specifically mentioning in the policy by paying higher premium. Also there are cases where
the loss occurred in a safe using a duplicate key are not covered under the policy. Also there
are policies where in the due to shop lifting the loss is not covered under burglary insurance
policy.

Under theft insurance the loss occurred due to theft of the property of an individual or a legal
person is covered. The theft can be of any nature as specified under Indian Penal Code. The
theft insurance policy covers all loss which are result of a theft of property belonging to an
individual. It may include theft of a ring, TV, camera, phone, jewellery, etc. There may be
individual theft policy where in the individual item is covered or there may be policy which
covers all property under a particular house.
As it is difficult to ascertain the items under a given particular property the premium rates are
higher than that of an individual item. Unlike burglary, theft is generally an insiders job who
steals some items or property without the consent of the owner. Also there maybe case of an
employee who steals from the office or business premise. As theft is more common in nature
the policy rates or premium charged is higher.

Policies

Burglary Insurance is one of the major classes of business underwritten in the miscellaneous
department and accounts for a sizeable portion of the department's premium income. Fire
insurance is an essential relating to the business house Burglary because due to house
breaking or burglary it helps them to recover the losses suffered by them. The burglary
department have mentioned other various types of policies i.e.

1. Business Premises Policy: - It includes all those policies which are issued to the
business premises which would cover goods in trust, stock in trade, tools relating to
trade such as calculators, typewriters and cash notes which are kept in safe against the
burglary or house- breaking. This policy covers all those damages caused to a
building due to burglary. With regard to stock in trade the policy is issued on first loss
basis. Now First Loss policy it insures the property to a specific amount that is to be
calculated on the basis of maximum loss accrued. Where if total loss is a physical
impossibility then this type of policy is considered and it taken for bulk commodities.
2. Money in Transit Policy: - It covers robbery, dacoits and hold up which are in addition
to burglary and theft as a matter of rule.
3. All Risk Policy: - This kind of policy is taken generally for the risk in cases of
jewellery, watches, personal ornaments and other valuable things. Also if the damge
or loss to these things happens by any accident for example by fire, theft or defective
settings and accidents then also will be covered under this risk policy. The following
are not covered by the risk policy;
(a) damage or loss due to war, invasion, act of foreign enemy, civil war, earthquake or any other consequences of nature.
(b) loss caused to any process of repairing or renovating any property that is
insured.
(c) loss or damage occurring to the deterioration or any of the inherent defect in
the property insured. Only applicable within the geographical limits which are
mentioned under the policy.

4. Cash-in-safe Insurance Policy: - This policy works only in those cases where the cash
is secured in a safe and granted if safe is a burglar proof and should be of approved
design. A permanently installed safe is better risk policy then the one which is not
permanent and can be shifted. Only under these two clauses this policy will be
granted;
(a) if the cash is lost from the safe with help of a duplicate key then those
belongings to the insured will not be covered until the key was taken by use of
force or violence.
(b) the list of the amount kept in the safe must be kept secure at some other place
then then the safe itself. And accordingly the liability of the insurer would be
limited relating to the amount shown.

Exclusions

The burglary policy has various exceptions to it which are as follows;

1.

The damage or any loss relating to any member of the insured's business or
household whoever is concerned as the principal or the loss or damage has resulted
from any act committed by any person lawfully on that premises where the property
was supposed to be;

2.

Those losses or damages which are to be insured against any fire, or the motor
insurance policy;

3.

Last exception relates to the damage which is caused to the deeds, promissory
notes, cheques, bonds, bills of exchange, stamps, books of account etc and
documents of any kind and coins are included unless they are specially mentioned
or agreed.

The policy also talks of the extension which is generally asked in respect of any riot and
strike, due to these the damage caused is the exclusion in all these kinds of policies. Under
the policy the term riot is the one which has been defined in the Indian Penal Code.
Infidelity Extension:Now if the loss or damage is caused due to the dishonest acts of the employees who are
entrusted with the money handling then those losses which are insured will not be covered
under the normal policy. For this reason the policy is extended at the additional premium only
for covering the losses that are insured and have been committed by employees dishonestly.
Therefore it is called as Infidelity Extension.

Cases
-

United India Insurance Co Ltd vs Harichand Rai Chandanlal4

Under this case the respondent took a burglary (house breaking) policy for a sum of amount
Rs. 7 crore from the appellant company. There was a theft of around 200 bags of jwar due to
which the insured claimed the loss amount from the insurer. The insurer company rejected the
claim stating that the said act was not covered under the policy. In the appeal before the
District, State and National Commission Dispute Redressal Committee they held that the
contention of the insurer company was not valid. The issue before the SC was that whether
the act was covered under the policy. The Supreme Court held that as per the terms of the
policy, the act of theft must be precedent by element of force and violence and as the
respondent failed to prove the same the court held the contention of the appellant valid.
The apex court in the judgement have discussed the importance of the terms and condition.
The SC held that the terms of contract has to be read strictly and no other meaning should be
given to the same. The court shouldnt use outside aid to give meaning to the terms of an
insurance policy.
The court also held that the insurer i.e. the insurance companies should amend the policies
such that they become more viable. The policy should be meaningful and shall include
definitions which a common man can understand easily. It further stated that the policies
should be such that it facilitates the claim of the insured person.

Oriental Insurance Co. Ltd. Vs. Samayanallur Primary Agricultural Co-op. Bank5

In this case the jewels were kept in the cashier's cash box instead of the safe which was
clearly mentioned in the policy. Therefore court held that the framework of policy regarding
the insured object has to be constructed in such a way that it gives reference to only those
things mentioned under it. No artificial meaning is to be considered.

4 (2004) 8 SCC 644

5 1999 (8) SCC 543

New India Assurance Company vs Sakar Iron Industries6

In this case the claim put forth by the insurance company was on the grounds that they could
not find any signs of breaking into the premises. So, court dismissed the contention of the
company. It was held by the court in this case that if the culprit enters through the small gap
then also it would be regarded as unlawful which requires great physical force to push
through the gap and therefore can be covered under the definition of the violent.

6 1996 (2) CPC 188

Conclusion
From the study conducted it can be stated that in case of burglary or theft insurance the
insured party is covered from the losses which occur due to theft or burglary be it at his house
or office premise as per the terms of the policy. Though the concept of burglary and theft
insurance is clear and not ambiguous, there are some suggestions which if incorporated can
benefit the insured person. Generally the Insurance companies repudiate the claim stating that
the act is not covered under the definition of term burglary or theft and thus not covered
under the policy. Thus definition or terms in policy should be more meaningful so that a
common man can understand easily.
Also the act burglary and theft hamper the growth of a business or an individual by setting a
financial burden. Thus it becomes important to get insured for acts like burglary and theft.

References

INSURANCE LAW AND PRACTICE, THE INSTITUTE OF COMPANY

SECRETARIES OF INDIA, available at
https://www.icsi.edu/docs/webmodules/Publications/9.3%20INSURANCE
%20LAW%20AND%20PRACTICE.pdf

Main types of Policies of Burglary Insurance, available at

http://www.preservearticles.com/2012041130274/what-are-the-main-types-ofpolicies-of-burglary-insurance.html

http://www.policyholder.gov.in/uploads/CEDocuments/Property%20Insurance
%20Handbook.pdf

https://www.casact.org/pubs/proceed/proceed24/24033.pdf

India: Case Comment: HDFC ERGO General Insurance Co v Bhagchand Saini,

by Neeraj Tuli, available at
http://www.mondaq.com/india/x/363006/Insurance/Case+Comment+HDFC+ERG
O+General+Insurance+Co+v+Bhagchand+Saini

Intro To Insurance: What Is Insurance? By Cathey Pareto, available at

http://www.investopedia.com/university/insurance/insurance1.asp

Burglary Insurance, Policy Bazaar, available at

http://www.policybazaar.com/commercial-insurance/burglary-insurance/

What are the differences between burglary, theft, and vandalism? By Voss Law
Firm, available at http://www.vosslawfirm.com/faqs/what-are-the-differencesbetween-burglary--theft--and-vandalism-.cfm

Theft and Burglary Insurance Policy from Royal Sundaram, available at

http://www.royalsundaram.in/your-business/theft-burglary-insurance.aspx

Claims, United India Insurance Company Ltd., available at

https://uiic.co.in/claims/claims-procedure

Property Insurance, Insurance Regulatory and Development Authority of India,

available at http://www.policyholder.gov.in/Faqlist.aspx?CategoryId=79

http://www.tribuneindia.com/2008/20080427/spectrum/rights.htm

http://www.rishabhdara.com/sc/view.php?case=19694