Insurance Coverage for Burglary and Theft: How They Are Different
Typical property owners don’t spend much time pondering the nuances between burglary and theft when it comes to insuring their property. Their only concern is, they just want “it” to be covered if or when they make a claim with their insurance company. We’ve all heard the phrase, “the devil is in the detail,” and when it comes to a property insurance policy, this is very much the case.
Consumers, as a whole, tend to equate theft and burglary as being the same thing. In reality, the words carry different meanings when applied to property insurance contracts. Theft and burglary will also be defined slightly differently when applying a legal definition. This can further confuse the public’s understanding of the meanings of each. For the purposes of this article, we’ll confine the explanation of each through our insurance lens.
Burglary is defined as forced entry into another’s premises with felonious intent. The key words in this definition are forced entry and felonious intent. A homeowner who lost their house key might be forced to “break into” their own home if no other options are available. This may be an example of forced entry, but there is no felonious intent. On the other hand, a criminal may kick in a back door and in a matter of minutes makes off with some valuable jewelry and artwork. This is obviously forced entry with felonious intent.
Another related term is robbery. Robbery is the taking of property from its rightful owner by using violence or the threat of violence. If a criminal breaks into a home and holds the homeowner at gunpoint while his accomplice gathers up valuable jewelry and artwork, they are committing a robbery.
Theft is stealing or removing property from its’ rightful owner, without their consent. Theft encompasses both burglary and robbery.
With a clearer understanding of these terms, they can now be applied to property insurance coverage and how it works.
There are two issues to keep in mind, exclusions and coverage sub-limits, when discussing burglary and theft coverage. Exclusions are causes of loss, exposures or conditions listed in a policy for which benefits will not be paid. Sub-Limits are dollar limitations that limit the amount payable on certain types of property if a claim is made. Each limit is specifically listed within the insurance contract so there is no ambiguity. Sub-limits can differ between insurance companies, so the policyholder needs to be aware of the limits as they are stated in their policy.
Most modern-day homeowners’ policies cover burglary and therefore theft even with their most basic coverage. However, there are limitations to burglary coverage generally based on vacancy of a home. If a home has been vacant (no contents, furnishings or occupants) for a period of 60 days or more, burglary coverage will generally be excluded. That means any claim arising out of a burglary is no longer covered. A home that is unoccupied (has contents and furnishing in it but not being used or lived in) can still have coverage maintained as long as the insurance company is aware of the situation. An example of this might be a couple who overwinter in Florida (aka “snowbirds”). Their home is unoccupied, but it is not vacant. For a vacant or unoccupied home, always keep your insurance agent informed of the situation to make sure that the appropriate coverage is in place to meet current insurance needs.
We thank guest author Greg Holton, owner of Kendall Inventory Service, LLC in Indianapolis, Indiana. He is a retired insurance agent with 25+ years’ experience in the industry. He is also an instructor for Insurance Career Training, Inc. The Hidden Risks of Undocumented Personal Property is a seminar presentation popular with estate planning attorneys, financial planners, and insurance agents as a lunch-n-learn or client workshop event. Contact Greg at 317- 509-8138 for more information