Theft & Your Property Insurance Policy...

During the summer months we’re all out and about a bit more and while protecting yourself against theft is always a good idea, it’s good to know where your insurer stands on the issue. To be clear, theft is the taking of property without the owner’s consent and with the intention of depriving the owner of its use. As I’m sure most people are aware, it is a criminal offence. In its most basic form property insurance policies exclude or limit coverage for theft that results from 5 items.

The first type of theft excluded is Conversion. For example, one may lend a snow blower to a neighbour, who begins to use it as if it was their own, and over time the neighbour fails to return the snow blower to the rightful owner. This is where property has been entrusted to an individual and that individual ‘converts’ the property into their own over a period of time. This term is often used as a matter of convenience and may not appear in the policy wordings.

Mysterious Disappearances are also not covered. These are instances where the item cannot be located and it’s absence can not be explained. If you’re running a business and the loss is uncovered while taking inventory, the implication is that the stock was stolen. Most property policies do not cover this type of loss, though some insurers may allow the option to purchase the coverage on certain items.

Coverage for a Theft from a Vehicle or a Break In is often only covered if there is physical evidence such as signs of forced entry. This condition is often accompanied by a requirement that the incident is also reported to Police. These measures are used to combat fraud by requiring a party to offer physical proof of the loss along with running the risk of being charged by Police if they report a theft that never was. Damage to the premises caused by thieves is often not covered by a basic policy, but if a business has coverage for loss of stock, coverage is often extended to include damage to the building regardless of whether the thieves were successful or not.

Lastly Theft by Trick is not covered. People are often defrauded by an individual who offers to buy something from them. A deal is struck, property changes hands, and payment is made either by a dishonoured cheque or a fraudulent or counterfeit instrument. From an insurer’s standpoint it is often difficult to know for certain if both parties were involved from the outset, and as such this type of loss is often excluded.

Property policies are not uniform, what one policy covers another may not, so it is important to review yours to see how your policy treats certain circumstances. If you are unclear, consult your insurance professional for guidance.