Planning to buy an insurance policy to protect your household goods and valuables against burglary? If you are, I suggest you look at the terms and conditions carefully before buying the policy. In many cases of robbery these days, household help are involved ? directly or indirectly. Despite your having a valid policy, the insurance company may not indemnify your loss at all ! Surprised? Look at the case of Surender Singh Chauhan.

On October 16, 1998, valuables worth Rs 27,400 went missing from Chauhan’s house. Police investigations revealed that the housemaid had helped her paramour steal the goods. Chauhan congratulated himself for having had the foresight to insure all his household articles, including jewellery and other valuables, against theft. Confident that he was well covered, he wrote to the insurance company, asking them to indemnify the loss suffered by him.

The insurance company, however, repudiated the claim on the ground that the theft had been committed by an ‘employee’, which came under the exclusion clause of the policy! Under ‘special exceptions’, the policy stated “The company shall not be liable in respect of loss of damage by burglary and/or housebreaking when any employee of the insured or member of the insured’s family is concerned as principal or accessory.”

So the main issue before the National Consumer Disputes Redressal Commission was whether the domestic help working in the house came under the definition of “employee”. While the complainant argued that the relationship between him and the household maid could be termed as that of ‘master and servant’ and not that of an ‘employer-employee’, the insurance company contended that according to judicial decisions, ‘employee’ means any person who was employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages had been fixed. Eventually, the apex consumer court ruled in favour of the insurer. (Surender Singh Chauhan Vs United India Insurance Company, RP No. 2455 of 2002).

So whenever you opt for a policy to protect your household goods and valuables , look at the terms and conditions very carefully and see whether the policy gives you a cover against theft by servants too.

In fact, insurance companies should remove this special exception from householders’ policies.