‘Cheap’ safe costs jewellers Rs 13 lakh insurance claim

State panel dismisses robbed jewellers' claim, saying they had used a locally made safe to store jewellery and had not ensured security of their shop

 If you think the liability of your insured house or shop rests solely with the insurance company, you could be mistaken. The State Consumer Disputes Redressal Commission recently dismissed a Rs 13 lakh insurance claim complaint of a Bandra jewellery shop, observing that the jewellers failed to take basic safety precautions for their burgled shop by storing jewellery in a locallymade safe and leaving its keys inside the shop.
    V R Jewellers at Bandra's Hill Road had taken an Oriental Insurance Company policy for their shop for the period January 1996 to January 1997. But on October 30, 1996, robbers broke into the shop, found the keys to the safe, after ransacking the drawers, and made off with jewellery worth Rs 13 lakh. The jewellers filed their claim with the insurance company, while their complaint with the police proved futile.
    After investigations, the insurance company's surveyor rejected the jewellers' claim on two grounds —one that the original keys to the safe, which the robbers used to open the safe and steal the ornaments, were lying in the shop itself, and second that the jewellers had committed breach of warranty by not securing the ornaments in a standard safe vault. Upset by the company's rejection, the jewellers moved the consumer court in June 1999 claiming Rs 11.5 lakh from the company alleging deficiency in service, and interest on Rs 10 lakh from February 1997.
    In defence, the company relied on their surveyor's report before the court. They contended that the jewellers were robbed only due to negligence on their own part. The court observed from case records that the jewellers had mentioned to the insurance company that their safe was locally made and cost them Rs 18,000 in 1986. But in the insurance company's proposal form, it is mentioned that the "safe has to be of standard make otherwise cover would not operate". The court thus held that the jewellers should have ideally bought a standard safe.
    The insurance company's surveyor had concluded that one of the shop's window was fixed with designed grill with sliding glass fitted from inside. "There was enough width between the wall and the grille so as to allow anyone to damage the grille and enter the shop," the surveyor had written, highlighting the shop's susceptibility to a break-in. Relying on this, the court noted, "The situation of windows was such that any person could enter the shop easily to commit robbery." The court also held that the jewellers made do only with an ordinary watchman, "If ornaments worth Rs 13 lakh were kept in the shop, then it was their duty to engage a watchman at least at night to protect its shop from thieves and burglars."
    Taking note of the evidence, the court found the insurance company's rejection of claim 'justifiable'. Manilal Bheda, partner of V R Jewellers, said, "We will appeal the verdict because after waiting for our claim for over a decade, we cannot be brushed off by blaming the robbery on us. While taking insurance, we had shown the safe to officials and said that this is all we have for security, to which they had agreed then."

Owners of V R Jewellers in Bandra have said that they will appeal against the verdict

Insure And Be Secure

In an age of terror and financial uncertainty, more people are turning to insurance as a fallback, says
Rucha Biju Chitrodia

Nothing is certain these days, which probably explains the growing interest in insurance products. People definitely want to secure themselves. After all, the risks one could face in a lifetime — both personal and professional — have only multiplied. This has as much to do with the times we live in as with the smart marketing of insurance products and, of course, their pleasant tax benefits. As a result, the age at which one applies for an insurance policy has drastically fallen.
    Says certified financial planner Suresh Sadagopan, "Earlier, we rarely got enquiries
from a person in his 20s.
But now, people are getting sensitised to insurance. Today, there seem to
be fewer people strutting around like peacocks, thinking that nothing will happen to them till their 80s. That kind of smugness has been shaken."
    For one, there is a marked spurt in applications for personal accident covers following the alarming instances of terror attacks, a fact that M Ramadoss, CMD at Oriental Insurance endorses. (Note: all accident covers don't factor in terror). Accident covers secure partial and total permanent disability, and total temporary disability for a particular period of time.
    Individuals are gravitating towards other general insurance products too. Familial and occupational security systems are crumbling and the magnitude of credit is higher these days. To top it, the concept of social security is still alien in our country. "These are the contributory factors," says Sadagopan. Certified financial planner Zankhana Shah adds, "Insurance has always understood and touched people's sentiments and at this point sentiments are working more. It is herd mentality."
    Other than motor insurance, which is mandatory, the trend is towards health covers. Says Ramadoss, "Health is growing at 35% per annum... Health costs are going up." While corporates increasingly offer group medical insurance, many individuals these days opt for a variety of health covers — before they turn 35. This ensures a smooth acceptance of their application and fairly low premium. Tax wise, it makes sense too. That's because, one gets a maximum deduction under Section 80D of the Income-Tax Act, of Rs 15,000 for individuals, and Rs 20,000 for senior citizens. If one takes an individual policy and then another for their parents, the total benefit would double. "People take two policies to avail of full benefits. To that extent, medical insurance has become attractive this year. People are moving towards these kind of plans," says certified financial planner D Sundararajan.
    Growing awareness about fitness and financial consequences of illness have played catalyst in this drift. "I've taken a medical policy as I have a history of medical problems in my family," says 28-year-old Sudha Kapoor, who has already renewed her policy once. That it comes with tax benefits is a bonus. In life insurance, says an industry observer, the ageold belief among agents that insurance is always sold and never bought is changing.
    "They see individuals actually calling up for term insurance cover. The tax benefits are seen as an added advantage and no longer the sole reason for buying insurance. With the crash in stock markets, investors are falling back on life covers." Sumi Das, 34, went for one this year to save on tax and thus dodged the bleak mutual fund scene.
Fear, as all are aware, is the key driver of insurance. As Sadagopan says, "People are taking huge home loans to the tune of say Rs 50 lakh. That keeps playing on their minds. They don't want the loan to devolve on their family if anything happens." Sales of property insurance rose too after natural disasters such as earthquakes.
The current economic crisis has added to the anxiety. Those cagey about the future of their wealth are going in for health-cumwealth combo insurance products. "In such products, one component goes towards funding medical expenses and the other works like Ulip (unit-linked ins u r a n c e plans). So if you make medicalre l at e d cl a i m s which are not part of health insurance, you can draw money from the Ulip-like component." Then there are the exotic products such as marriage insurance which works if your wedding gets postponed at the last moment and domestic travel insurance to insure baggage loss, says Sadagopan.
But the unusual flavour of the season follows the Satyam fiasco. There are more enquiries for directors and officers insurance — a liability policy that covers senior management from claims from third-parties. "These cover liabilities that arise due to misdeeds in companies and only directors and key executives like company secretary," says Ramadoss. But these don't apply to you and me.
Whatever the type of policy, the mantra seems to be insure, and be secure.