Theft

Theft: Definition in insurance

Insurance companies generally define theft the same as everyone else (i.e., someone takes property that doesn’t belong to them). Several types of policies, including homeowners insurance policies, cover losses from theft and attempted theft. In insurance-speak, that means theft is a covered peril on those policies.

Theft insurance in your homeowners policy

Theft insurance is simply coverage for when someone steals your property. However, most people don’t need a separate theft insurance policy because the coverage appears in their home insurance in a variety of ways, namely:

• Personal property coverage. Coverage C is probably what comes to mind when you think about a loss from theft because it helps replace stolen items.
• Dwelling coverage. A thief can also cause physical damage to your home. Coverage A helps pay for repairs, such as broken door frames.
• Other structures coverage. If a detached structure like a garage or shed is damaged by an intruder, Coverage B can help with those repairs.

Having your property stolen can be a traumatic experience. But the theft insurance in your homeowners policy can be a big help in getting things back to normal.

When is theft covered?

If someone breaks into your home, your homeowners policy typically covers your stolen items as well as any damage the thief caused. One cool feature in homeowners insurance is that most policies even cover these losses when they occur away from your home. This means that if someone steals from your hotel room while you are on vacation, your insurance company most likely covers that loss up to your policy limits.

However, home insurance policies don’t necessarily cover the entirety of your losses. How much you recover in a claim is usually impacted by your:

• Coverage limits. Each of the coverages that apply after a theft has a coverage limit (i.e., the maximum amount your insurance company pays for a claim). If a thief takes $50,000 worth of property, but you only have $40,000 in personal property coverage, then you’re going to come up short.
• Deductibles. Let’s assume the thief also smashes in your front door. Your policy covers that damage, but it also has a $500 deductible. You’re responsible for covering that amount for any repairs.
• Sublimits. Most insurance companies also place sublimits on valuable personal property. A sublimit caps the amount you recover, sometimes limiting your coverage to just $1,500.

Sublimits are common for items like computers, jewelry, fine art, and collectibles. You can protect these items with a scheduled personal property endorsement.

When is theft not covered?

Not all theft scenarios are covered. For example, home insurance policies typically exclude theft if the items were stolen:

• By you.
• From a home that’s under construction.
• From a home that you rent.

As for the first exclusion, insurance companies simply don’t cover an insured’s illegal actions. But the other two are about increased risk. For example, more people come in and out of a home when it’s under construction, so there’s a greater chance for something to be stolen.

The same is true when you rent the home out. Even if you believe you know your tenants very well, their presence (and their guests, for that matter) increases your risk for theft. You could protect yourself with landlord insurance, but another option is our versatile House & Property policy.

You should also note that homeowners insurance seldom covers stolen cash ﹘mainly because it’s difficult to prove the loss.