2011 was a year of the ‘new normal’ with natural disasters and man-made disasters (Rena container ship is just one). This means claims have reached a financially unprecedented amount with the business environment altering to bring new challenges home and abroad.
However, burglaries still continue at business premises, even though the majority of clients pay by eftpos or direct debit. To explain, burglary and theft are two different incidents. A burglary occurs when someone breaks down a door or forces a window open or cuts open an area to obtain entrance into the business premises and contents/money/equipment/fit-out/stock are stolen. A theft occurs when someone walks into a back door that has been left open, or climbs in an open window and no force is used to get into the business premises. Naturally the excess is lower for burglary as you have taken all reasonable steps to limit entry to the premises. The excess is much higher for theft as accidentally you have enabled a robber to commit an opportunistic crime.
Some of the worst thefts and burglaries occurred after the February earthquake when ‘low-lifes’ were walking off with office equipment including chairs and couches from businesses which had been damaged and were vacant.
There are some wild and wonderful burglaries and some which are downright funny. One of the funniest was where a beauty therapist who had done self defence courses tied up the burglar with fluffy pink handcuffs in a basement and kept him a prisoner for some days! This did not happen in New Zealand.
One business had three burglaries and last December, put a notice on the front of the premises saying, there was no contents or money as it was the Christmas holidays. However, another burglary occurred. The building had a monitored alarm and security over windows and doors.
Many years ago we had a client who claimed for a theft of 120 spa towels. We thought this was a lot of spa towels and at the end of the day the owner remembered that she had sent them all off to be laundered.
A few years ago, a family with a mother, a daughter with a pram, and a son with a walkman thought of a wonderful scam. They would go into a busy clinic and the mother would ask for advice on product, while the young man would dance to the Walkman and the daughter would comfort a crying baby – while putting GHD’s into the pram. Nothing was ever noticed until they left the premises. They successfully continued this ploy through the North and South Islands. The police never caught them.
A clinic owner was suspicious that a lot of stock was going missing, too much for a client to take as it was in different treatment rooms. She had already placed a security camera in the foyer of the clinic. In desperation she decided to note down the habits of the therapists looking for a common habit which would allow for stock to be hidden. She noticed that each afternoon, one of the therapists would take an armful of towels into the bathroom for washing but they were left on the floor for some hours before putting in the washing machine. She peeped into the room after the therapist one afternoon and observed her putting a lump inside each towel. She confronted the therapist as she was leaving that night and asked her to open her shopping bag and then to show her the boot of her car. She had been stealing from the owner for some 4 months and had cost the clinic nearly $80,000 in lost stock.
And, finally, the tale of the sleight of hand. An owner noticed money was missing from the till. This was a few years ago when a lot more people paid with cash. Every day $50 or $100 was missing. She informed the staff that a security camera was being installed and noticed no-one was concerned. Unfortunately, the money still went missing and taking advice, the clinic owner called in a detective to monitor the camera for 2 days. He could see nothing. The owner had a brainwave. Can we play it on slow motion as hands are going into the till and giving change, she suggested. The speed of the camera was lowered drastically and in amazement they watched the manager’s supple fingers wedge a $50 bill into her palm as she gave the client change of $5. When charged, the staff member denied it even when shown the event in slow motion. She had managed to steal in 6 months some $55,000 with little effort.
If a staff member steals from you this is neither theft nor burglary. It is covered under Fidelity Guarantee. This insurance protects businesses from loss of money, stock, or contents resulting from crime committed by employees. Common claims allege employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud and other criminal acts. This protects you from any potential in your financial controls.
However, most burglaries or theft are external and the most important point is proof of ownership. If you buy something “under the table”, you will not have proof of the original purchase and without photographs or bank statements or invoices, the insurance policy will not pay out. Burglary claims can be simple if you are organized but a nightmare if you are not. We have burglary claims which are paid out within a week of receiving the claim and others that drag on for months and months, because there is no receipts or invoices to prove ownership of any item.
Advice for any business owner who has any kind of sudden accidental damage to property and/or stock is to take the following steps.
- Phone the police and get a police acknowledgement form with a number.
- Phone TIB and a claim form will be sent out.
The Claims Manager will advise you to –
- Locate all your receipts or invoices for large items
- Your inventory of all assets must be photocopied and items circled which have been taken
- List of all stock and items taken circled
Your bookkeeper or accountant to provide proof of income lost if the business has to close for a few days due to damage to the premises ie malicious damage or arson. If you are able to ring your clients to rebook another day if it is a shorter period, then your business interruption will not pay out.
Your computer system should print out your takings for the week before the burglary.
- If your burglary is large, then the insurance company will appoint an assessor. Please provide him/her with all the above forms plus the completed claim form.
- It is a temptation to claim for more than you are entitled to. It is not worth attempting this as the whole claim will be forfeited and your business may be uninsurable. An example, historically, was a therapist claimed for goods damaged in a fire. Among the many items claimed for were towels which were alleged to have smoke damage. When the towels were located they were outside the premises in rubbish bags and the towels were 25 in number not the hundred claimed for. The whole claim was denied and the insurance was immediately cancelled. Because of the attempted fraud the owner could not get insurance elsewhere and eventually the business was sold.
The best and easiest way of running a business is to avoid burglary and theft and fire to the best of your ability.
Suggestions include –
- Monitored alarm
- Doors with bolts and deadlocks
- Fire extinguishers which are serviced yearly
- Stock left after hours away from window
- Stock in rooms in locked cabinets or securely closed cabinets
Insurance is to protect you from sudden, unexpected and unplanned loss. Limit your loss to enable your business to grow without the stress of continuous burglaries and theft.
My own experience was when moving premises some four years ago. The woman in charge of the moving company asked if we would like a new cleaning crew for the larger building and I agreed. I thought this meant one or two people would come in weekly to clean the offices, computers etc in a professional way and they would be ethical. The work was shoddy but the worst was that in a fortnight they had stolen all the petty cash and thousands of pre-paid envelopes. The lesson learnt was to always request references of anybody who comes into your premises to do work, plus proof of liability insurance.