Irda wants insurers to blur the lines between theft, burglary
For years, non-life insurers have rejected claims for theft under burglary policies on the ground that the two were not the same.
By Mayur Shetty, TNN |
MUMBAI: For years, non-life insurers have rejected claims for theft under burglary policies on the ground that the two were not the same. Such shortchanging will soon cease to nettle policyholders with Irda’s plan to rid policies of ambiguity by getting insurers to recast policies.
The move by the regulator comes in the wake of a Supreme Court decision where the court has asked the insurance industry to ensure that the policy covers what it is understood to mean in common parlance.
Legally speaking, burglary involves theft using violent forcible means. Insurers have been using this as a pre-condition to settle any claims. If a burglar managed to enter any premise without using force, the claim was invariably rejected. This narrowed down the definition of theft substantially since any entry using duplicate keys would not be considered burglary.
Irda wants insurance companies to widen the scope of burglary cover to include every kind of theft. The court order was in response to a case filed by one Harchand Rai Chandan Lal against United India Insurance seeking to recover a claim under a burglary cover.
Insurers say that traditionally, burglary was covered because it was easier to establish while other forms of theft could arise out of the policyholder’s negligence. However, they agree that widening the definition would make the cover more popular.
The court, in its order, said, “The definition of the word burglary should be given meaning which is closer to the reality of life. The common man understands that he has taken out the policy against theft. He hardly understands whether it should precede violence or force. Therefore, a policy should be a meaningful policy so that a common man can understand what is the meaning of burglary in common parlance.”
The order added that though the court had interpreted the policy in legal terms, the court hoped that insurance companies would amend their policies so as to make them more meaningful to the public at large. It should be in a language that the public can understand rather than become more technical so as to defeat the cause of the public.
Insurers say that any new product will have to be priced differently than burglary covers. This product would have to be lodged with the Irda under the file-and-use plan. Irda wants insurance cos to widen scope of theft cover.
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