Written by William Paull
Co-Founder & Account Director
On this page
Does business insurance cover theft?
Only if you have taken the theft section. On the business packs we place, the property section is accidental damage cover, and it says in plain words that it does not cover theft. Theft is a separate section, with its own sum insured, its own excess and its own limits.
Your schedule, the part of your policy that lists your covers and limits, shows whether you have it. A business with almost nothing worth stealing can leave the theft section off and stop paying for it. The other sections a pack can hold are on our business insurance page.
On the business packs we place, you need the property section before you can add theft. The theft sum insured you choose cannot be higher than the property sum insured for the same contents or stock. If you want $30,000 of theft cover, that property needs to be insured for at least $30,000 too.
What does the theft section cover?
The main theft cover responds to specified events. How someone took the property helps determine whether the main limit or a smaller benefit applies.
The main cover pays only when the theft involved one of these:
- someone who forcibly and violently enters, or tries to enter, your premises
- someone who was unlawfully concealed on the premises
- someone who threatens or uses physical violence against you, your staff or others
- an armed hold-up at the premises
- someone who breaks into a locked cabinet, counter or showcase inside the premises
A robbery at the counter, with threats to your staff or a hold-up, meets the test as surely as a smashed door.
Cash is different. On most policies the theft section pays only $500 for money. Cash in your till or safe needs a money section, with an amount on your schedule for each place you hold it: the premises in business hours, outside them, or a locked safe.
What happens if there are no signs of forced entry?
Theft from inside the building with no sign of forced entry is usually still covered, but only under a separate benefit with a smaller cap, and only where you took the theft section. That cap is usually $20,000. Most policies pay the higher of $20,000 and the figure on your schedule. Some fix it at $20,000 flat. Some pay the lesser of $20,000 and your contents sum insured, unless you choose more.
On some policies that cap leaves your stock out altogether, and on others it depends on how your contents and stock are set out on your schedule.
Say $30,000 of insured contents is stolen from inside the shop overnight, with no sign of a break-in. If the loss is covered and the applicable limit is $20,000, that leaves a $10,000 shortfall before any excess.
If I'm robbed, what will I be paid for my stock?
Stock is usually paid at its market value when it was lost, or what it costs to repair or replace. That is different from the rest of your contents, which most of these policies replace new for old. On some, old stock that no longer sells is capped at what you paid for it.
Set your stock sum insured at what it would cost to buy it again, including freight and duty. Use that cost, rather than your selling price.
Some policies split your property into categories, each insured for a set figure, so you can be well covered in one and short in the next. Tobacco and alcohol are a common gap. Most policies do not count either as stock under the theft section unless your schedule names it as a category.
On most policies the seasonal increase in your stock figure reaches the theft section too. The seasonal stock clause explains how it works.
What else changes what you are paid after a theft?
The damage done getting in is paid apart from what was taken. On the wordings we place, the property section excludes theft but still pays for physical damage done to your property during a theft or attempted theft: the smashed window, the forced roller door, the ruined lock. Where buildings are insured, it also pays for theft of parts of the building. So the door and the stolen laptops sit in two sections, off two sums insured, and for one break-in you pay one excess, the highest that applies. If you rent, the door is your landlord's. Where your lease makes you liable to repair it, the theft section pays for that damage, commonly up to $20,000, or more on some where your schedule shows a higher figure.
Most theft sections also pay for the clean-up, including after a police forensic examination.
A thief who used a key or a code is usually outside the main theft cover. Most of these policies exclude theft in some form where the thief got in with a key or a security code. Some treat an unlocked door or window the same way. On some, the exclusion applies only where a key or code was left at the premises while you were closed. Either way, a key left on site can cost you the main theft cover.
A key is not one of the five ways the main cover pays for. If the thief also did one of the others, such as threatening your staff or breaking open a locked cabinet, the wording and any key exclusion decide what pays. Otherwise, what is left may be the cap for theft without forced entry, or the cover for theft by staff.
Stock that cannot be accounted for is not a theft claim. Unexplained disappearance and inventory shortage are excluded on most packs, including where they come from clerical or accounting errors or a shortfall in what a supplier delivered. A short stocktake on its own does not prove a theft the policy covers.
Theft by your own people sits apart from the main cover. Loss caused by you, your directors, partners, employees or family is excluded from the main theft cover. The same policies put back one narrow exception: theft by an employee or a family member who forced their way in. It does not extend to the owner, a director or a partner. Beyond that, staff theft falls to a small employee dishonesty benefit: $5,000 for any one event, if you discover the loss within 45 days of it happening. On most you must identify the employee. Fuller cover can be added, as a separate section on most, or through the pack's management liability section on some. Some policies drop the $5,000 benefit once you hold the fuller cover.
How do I make sure a break-in is covered?
- Does your schedule show the theft section as taken? If it is not listed, theft is not covered.
- Is the cap for theft without forced entry high enough? Compare it with what could walk out of your building on a quiet afternoon.
- Does each figure match what you hold? Where your theft section splits your property into categories, look at each one as well as the total.
- Can you meet the security conditions as written? Safes, locked yards and alarm requirements are commitments. Find out now whether you can meet each one.
A common condition applies to valuables held as stock, such as jewellery, watches, precious stones, gold and silver articles, coins, stamps and personal ornaments. Each one worth $500 or more must be in a securely locked safe or strongroom outside business hours. It is not the same on every wording, so work to the figure in your own.
Frequently asked questions
Is stock stolen from an outdoor yard covered?
Usually only under a separate, smaller limit for property in the open air. That limit commonly comes with security conditions, such as the yard being enclosed and locked outside business hours. On the policies Consolidated Insurance Brokers places, the cap for theft without forced entry does not reach yards, verandas or other open-sided structures. If the stock you leave outside is worth more than the open-air limit, the difference is yours to carry.
Is shoplifting covered by business insurance?
Generally no. Most packs leave shoplifting outside the benefit for theft without forced entry. The main theft cover does not reach it either, because it turns on forced entry, concealment, threats or hold-up, and a shoplifter does none.
Are tools stolen from my ute or van covered?
Away from your premises, tools and other portable items sit in the general property section, if you take it and your schedule shows them. The theft section covers your premises only. Items covered without being named one by one are capped per item, $3,000 on most. For an item worth more, ask for it to be named on your schedule so the limit matches its value. Other policies, such as a commercial motor policy, can also cover tools, on different conditions. Some policies pay for tools stolen from the ute only if it was locked and there are signs of forced entry. Our trades insurance page covers tools on the road.