Prove vandalism loss for insurance

Recently, an incident of a group of people going on a rampage and vandalising a car with rods, after it allegedly brushed past one of them, Delhi's Moti Nagar became national news after a video of the same went viral. In the past few days, we have also seen how protests for reservation turned violent with major incidents of vandalism reported in Pune, Navi Mumbai, Chakan, and Aurangabad. Vandalism can lead to substantial damage to an individual's vehicle, property or even themselves. With proper insurance covers, money can be received in lieu of such damage caused by vandalism to cars/bikes/scooters, property, etc.

However, it is important for policyholders to understand the key conditions while making a vandalism insurance claim. Merely stating that the insured asset has been destroyed by vandalism is not sufficient. DNA Money talked to insurance officials and experts to give the details.

What is vandalism

Insurance policies usually have clauses that say the insurer will indemnify the insured against loss or damage to the insured object by riot and strike, and by malicious act, etc. This goes for motor insurance policies, and home insurance covers. While we might casually drop the word 'vandalism' in our conversations, there is a clear definition of vandalism. According to Santosh S Dubey, national manager - commercial claims, SBI General, vandalism is defined as "loss of or visible physical damage or destruction by external violence directly caused to the property insured".

So, it is important to understand that the vandalism should lead to visible damage or loss by 'external' violence. In case of motor insurance, vandalism risk is part of the own-damage (OD) part of the policy. "But do remember that the act of vandalism should not be due to some criminal offence that you have caused. If that happens, the insurer may take a different stance on how to settle it," pointed out Sajja Praveen Chowdhary, head - motor insurance, Policybazaar.com.

For instance, if your car bumps into a person walking on the road, and a crowd comes and vandalises your car, then there is a question mark. The same holds true if you start an ugly fight with people, and then a group of people come and vandalise your home. The lesson here is that, any illegal action on part of the policyholder, that could lead to vandalism, is likely to be rejected by the insurance company.

How to prove vandalism

It is not merely enough to say that vandalism happened. The onus is on the policyholder to prove it. Yes, it may sound ironic, but even if your insured asset has been vandalised, there is the requirement to furnish proper evidence. SBI General's Dubey said that the incidence of vandalism can be a localised event and should be publicly known by way of reporting in media (broadcast), newspaper, and police report, etc. This is sufficient proof that the occurrence has taken place, he added.

Do bear in mind that getting media coverage of vandalism can be a tricky and also a tough job. Anecdotal evidence also shows that sometimes police reports do not reflect vandalism in the manner that has happened due to political or other factors.

"During election a few months ago, my bike was vandalised between a fight between two political parties. My fault was the bike was parked just outside my home. We were not a party to the fight in any way. But the political members fought and some of them set dozens of bikes and cars on fire in our locality. There was huge pressure on us not to report it to the police. Media also did not report it," said bank employee Satyen Verma, who lives in Tier-3 town.

Loss amount and documents

Often during such vandalism acts, the insured asset, especially a motor vehicle, often gets damaged beyond repair. If you take such a vehicle to the garage and the repair cost is more than 75% of the insured declared value (IDV), then often it is considered a total loss. Huge damage can also lead to a situation where there is no point in repairing the asset. "In such cases, you can get total IDV. If you take the add-on cover of return to invoice value, then you can get the full value of a brand new car," said Chowdhary of Policybazaar.

Do remember that IDV is not the brand new price of the motor vehicle. Usually, the percentage of depreciation is used to arrive at IDV. So, IDV is more of a market value. Vehicles that are more than one year old, but less than two years old, face 20% depreciation. Anything more than four years, but less than five years attracts 50% depreciation.

Documents for vandalism claims

The insurance company representative / surveyor will visit the loss site, verify the damages/loss and solicit necessary documents, depending upon trade/items damaged of a policyholder. "Some basic documents are required to prove a loss, due to an incidence of vandalism. These are newspaper cuttings/media clippings, police complaint with a list of items lost/damaged, supporting documents towards loss suffered etc," said Dubey.

Take note

There can be some unfortunate situations where despite vandalism happening, the insurer can reject the claim. "If the requisite documents are furnished, the claim would be settled by the insurance company. However, in the event of any of the following, a claim may be rejected or partially settled, if the claim is within policy excess/deductible, the items not covered under the policy," said Dubey. Bullion, works of art, cheque, manuscripts, etc, even if vandalised cannot be claimed for insurance purpose.

The problem happens when the alleged vandalism acts have some different angle such as fights, leading to destruction. "Many people also indirectly create situations where they react to words uttered on the road. Aggressive behaviour can result in more problems. If both parties file criminal complaints against each other, then the insurance company can always say that is not vandalism. But in genuine cases, consumer courts have often penalised insurance firms for rejecting proper claims. So, they are careful these days," said Avishek Mitra, a practicing lawyer, based in Delhi.

In case of vandalism to an insured asset, the important thing is to inform the insurance company immediately. "If you have video or some media clip, that is good. But do not waste time in informing the insurer. Yes, there may be a situation where movement can be restricted due to curfew in the area. Then, you should inform the insurance company at the earliest. Take some pictures of the damaged asset. It is better to do as much as possible within the available time," advised Chowdhary.

If you cannot submit video or pictures, the visiting insurance company representative/surveyor would verify the nature and extent of damages and shall also verify corroborative/circumstantial evidence to take the claim forward.

TO ENSURE VANDALISM CLAIM IS APPROVED:

• Inform insurance company of the damage immediately
   
• Submit proof such as video or picture as evidence
   
• Present documentary evidence such as police reports or newspaper reports of the incident
   
• Avoid engaging in illegal acts that could damage your property as the claim is likely to be rejected