Burglary, money and fidelity guarantee insurance in Malaysia: forced entry, cash in the safe, staff theft and what to do after a break-in

What do burglary, money and fidelity guarantee insurance each cover?

These are three separate covers, and each one answers a different "what if". PIAM, the General Insurance Association of Malaysia, sums them up in one line each: burglary and theft insurance covers assets such as equipment and inventory stolen or damaged in a burglary, robbery or theft at your business premises; money insurance covers cash, cheques and electronic money against theft, loss or damage in transit, on the premises or in custody; and fidelity guarantee covers losses from fraud or dishonesty by your own employees, such as embezzlement, theft or forgery.

The easy way to remember it: burglary is for outsiders who break in and take your things, money insurance is for cash wherever it sits or travels, and fidelity guarantee is for insiders. A fire policy covers none of these. Your fire insurance for the shop or factory protects the building, machinery and stock against fire and the perils you add, not against theft.

The table follows Great Eastern General's Easi-Biz wordings and the terms commonly found in Malaysian policy wordings. Your own policy schedule and wording decide the details, so read them side by side with this guide.

Does burglary insurance pay if there was no forced entry?

Usually not, and this is the condition that surprises most shop owners. Great Eastern General's Easi-Biz covers contents stolen from the business premises only when the theft is "accompanied by actual, visible and forcible violent breaking in or out of your premises", or in an armed robbery or hold-up. The theft section of Easi-Biz Standard and Premier uses the same test: actual, visible, forcible and violent.

In practice the insurer or the adjuster looks for a cut padlock, a bent roller shutter, a broken window grille, a hole in the roof or wall, or a forced door frame. If the thief walked in through an unlocked door, used a duplicate key, or was someone you let in, the claim usually fails the test, even when the loss is real.

Other limits that are common in burglary wordings

• People lawfully on the premises. Many wordings exclude theft by your family, domestic helpers or anyone lawfully on the premises, which takes in staff, customers and contractors during working hours.
• Open yards. The insured premises often exclude any yard, garden or outbuilding unless the schedule names it. Pallets, scrap metal, cable drums or materials stacked outside a factory need to be declared.
• Empty premises. Many wordings stop theft cover once the premises have been unoccupied for more than 30 consecutive days, unless the insurer agrees. Tell your agent before a long closure or a move.
• Missing is not stolen. You must show the goods were stolen, not misplaced. A shortage found only at stock-take, with no sign of entry, is rarely a burglary claim.
• Theft after a fire. Great Eastern General's GREAT Business Care packages list theft during or after a fire as an exclusion.
• Trades thieves target. Easi-Biz lists excluded businesses, including jewellery or gold, handphones and accessories, Chinese medicines, and shops whose cigarettes, wine and spirits exceed 10% of total stock value. If you run one of these, ask me to check what is available.

Which cover answers which loss?

Cash in the safe, in the drawer and on the way to the bank: what money insurance needs from you

Money insurance covers more than banknotes. Easi-Biz lists cash, bank and currency notes, cheques, money orders, postal orders, credit card vouchers, sales vouchers, unused postage stamps and revenue stamps, while in transit anywhere in Malaysia and while in your business premises. The condition that matters most: after business hours, these must be "kept secured in a locked safe, locked drawers or locked cabinets". Great Eastern General's GREAT Business Care disclosure sheets add money vending machines to that list.

So a cash drawer left unlocked overnight, or the takings left in a bag under the counter, sit outside the cover. Policy wordings in the Malaysian market commonly add a few more conditions:

• Safe keys go home with you. Loss from a safe opened with keys or a combination left on the premises after closing is commonly excluded. The keys should stay with you or a responsible staff member who takes them when leaving.
• Keep a record outside the safe. Insurers expect proper records of money, and some wordings ask that the record of cash in the safe is kept somewhere other than the safe itself.
• Errors are not theft. Shortages from counting, change-giving or accounting errors are excluded.
• Never leave cash in the car. Loss from an unattended vehicle is a standard exclusion.
• Transit is priced on what you carry in a year. For cash in transit, the premium is often based on your estimated total carrying for the year and adjusted after the year ends against the actual amount, so give a realistic estimate.

Check the limit, not just the name of the cover

A shop that keeps a weekend's takings in the safe can easily hold more than RM5,000. If your peak cash is higher than the limit, the difference is your own loss. Insurance also does not replace good habits: bank more often, vary the time and route, and send two people when the amount is large.

A staff member stole cash or stock: how fidelity guarantee insurance works

When the thief is on your payroll, burglary and money insurance usually step aside. Burglary wordings exclude people lawfully on the premises, and many money wordings exclude cheating and criminal breach of trust by anyone in your service. That gap is what fidelity guarantee is for.

Great Eastern General's Easi-Biz Standard and Premier describe it this way: it reimburses "pecuniary loss or loss of goods or property", up to the limit in the schedule, caused by fraud or dishonesty by any employee or group of employees acting together, committed:

1. during the policy period,
2. during the uninterrupted continuance of that employee's employment, and
3. in connection with the employee's occupation and duties.

The third point matters. A cashier who takes from the till, a storekeeper who sells stock on the side, or an accounts clerk who pays fake supplier invoices into their own account are all acting within their duties. Cover can be on named employees or on all employees: Great Eastern General's condo plan for management bodies, for example, covers "all employees" with RM30,000 any one employee and in the aggregate.

Conditions that decide fidelity claims

• Discovery period. Many wordings in Malaysia only cover dishonesty discovered during the policy or within 6 months after it ends, or within 6 months after the employee dies, is dismissed or retires, whichever comes first. If you cancel the policy, or the person left long ago, a late discovery may fall outside.
• Once you know, that person is no longer covered. After you discover dishonesty by an employee, cover for that person ends. Keeping them in a cash or stock role is at your own risk.
• Your own checks must run. Wordings commonly exclude losses where the agreed checks on accounts and stock were not followed, and unexplained shortages found at stock-take.
• Money you owe the employee is deducted. Unpaid salary or commission due to the employee is set off against the payout, which is why the claim papers ask for the last salary slip.
• Tell the insurer early. Notice is usually required as soon as you discover the loss, with full details and proof within a set time, for example 3 months.

Limits in small packages are low: the GREAT RetailCare, FoodBizCare and BeautyCare packages each set fidelity guarantee at RM5,000. A factory whose clerk handles six-figure supplier payments every month should ask how much one person could take before the bank reconciliation or the auditor would catch it, and set the amount from there.

After a break-in or a theft: what the insurer asks for, step by step

1. Keep everyone safe and leave the scene as it is. Do not tidy up, repair the lock or throw away broken parts before photos are taken.
2. Make a police report as soon as you can. Great Eastern General's claim checklists list a police report for burglary, for money and for fidelity guarantee, so staff fraud needs one too.
3. Photograph the damage and the point of entry: the cut padlock, the bent shutter, the forced drawer or safe. For money lost on the premises, the checklist asks for photos of the damaged drawer, cabinet or safe and the point of entry.
4. Notify the insurer and your agent in writing the same day or the next. Wordings say "immediately", and some set a cut-off, for example 30 days for burglary or 14 days for money, after which the loss is not payable.
5. Write a statement of claim listing what was lost or damaged and its value.
6. Gather proof of value: purchase invoices, delivery orders and stock records for goods; receipts, payment vouchers, pay-in slips, cheques and bank statements for cash.
7. Get repair quotes and keep the original repair bills for damage to the premises or the insured property.
8. Work with the adjuster if one is appointed. If stolen goods are later recovered, tell the insurer: after paying you, it may be entitled to them.

Since 1 October 2021, the checklist also asks businesses for ownership papers: for a Sdn Bhd or Berhad, Form 24 and Form 49 (or the Section 78 and Section 58 returns, or the latest annual return) plus the NRIC of the authorised signatory; for a sole proprietorship or partnership, Form A (and Form B after a change of owner) plus the signatory's NRIC. The claim line printed on Great Eastern General's package disclosure sheets is 1300-1310-88. If a claim is turned down and you think the decision is wrong, my guide to rejected claims and FMOS explains the next steps.

How much cover does a shop or factory need? A worked example

There is no standard amount. The figures come from your own business: peak stock, peak cash, and how much one trusted person handles. Here is an example with made-up figures to show the thinking.

Example assumptions (not a real client): a hardware shop in Puchong; stock and contents worth RM400,000, of which about RM100,000 is small, high-value items such as power tools; cash sales of about RM6,000 a day, banked on weekdays, so Friday, Saturday and Sunday takings stay in the safe until Monday; one staff member takes up to RM12,000 to the bank per trip; one accounts clerk pays about RM80,000 a month to suppliers.

First loss or full value: why it changes the payout

Great Eastern General's GREAT RetailCare disclosure sheet explains the two bases. If property is insured on market or full value, the average clause applies: insure less than the real value and you bear a share of every loss. Sections insured on a first loss limit waive the average clause. Using the same example:

The example ignores excess and other terms. The point is that the sum insured has to match the way the policy pays, so ask which basis your theft section uses.

Not sure which cover your business needs? What I check with you

On Great Eastern General's public pages, these covers appear as sections of its business plans rather than as separate stand-alone products: Easi-Biz includes theft with forced entry and cash; Easi-Biz Standard and Premier list theft, money and fidelity guarantee as separate sections; the GREAT Business Care packages for small retail, food, beauty and education businesses come with fixed limits; and the condo plan for management bodies includes burglary, money and fidelity guarantee. For a larger factory or warehouse, I check with Great Eastern what can be offered for your case.

When you WhatsApp me, I usually ask:

• what you keep on the premises at the peak, including anything in a yard or outbuilding;
• how much cash you hold overnight and over weekends, and how it gets to the bank;
• who handles cash, stock and payments, and how often you reconcile;
• what security you have now: grilles, alarm, CCTV, a safe;
• what your current business insurance already covers, and what your tenancy agreement asks for. If you rent, my guide on who insures what in a rented shop or factory helps.

I advise in Mandarin, English and Cantonese, and there is no hard selling: if your current policy already covers you, I will tell you so. This guide is general information, not legal advice; your policy wording and schedule decide each claim.