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SA's No 1 Insurance Blog

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Imagine owning a pawn shop in South Africa right now

You’ve got a bunch of hard up people queuing at the door wanting your cash. Some are honest…but some are criminals.

This past Saturday I took a stroll through some of the more seedy parts of Boksburg. I happened to walk past a pawn shop with a behemoth standing at the gate.

For those of you from our northern suburbs who might no know what a pawn shop is; it’s basically a shop where you bring your unwanted goods, and in exchange receive a pitiful amount of money for those goods.

Now at first glance I thought it was some nightclub. Could you blame me?
Here was a guy at the door, built slightly larger than a barn door. What was I supposed to think?

But the sheer amount of furniture on the pavement, and the fact that it was ten in the morning persuaded me different. Of course, that didn’t stop me from peering through the door and having a look see.

This business had two sets of gates. The first gate was to let you into a sort of holding area, and once you’re inside, they open the second gate allowing you to pawn your toolbox, toaster, and lounge suite (Toolboxes is what most people seemed to be doing!).

I got to thinking about what the owner does with his cash when he locks up? Does he leave it in a safe on the premises overnight or does he take it home with him?

That got me to thinking whether these guys had even heard of anything like money insurance.

So here’s what money insurance doesn’t do?

If you’re a shop owner reading this, you’re probably rubbing your hands in glee at the prospect of being able to claim for all those till shorts.

  • The first bit of bad news is that till shortages are not covered.
  • Dishonesty of owners or employees is also not covered unless discovered within a specified time period (Usually 14 days).
  • A further risk you might face is SARS (South African Revenue Services), or some other government agency, walking in and confiscating your cash because they reckon you’re running a pyramid scheme.
  • And while we’re at it coin operated machines are another big no-no!
  • Theft involving the use of the actual safe keys is also excluded. This won’t apply if the keys are obtained through violence, threats of violence, or if you can prove collusion between staff and an outsider.
  • Unlocked safes are not covered and neither is cash left lying around unattended (Unless you can prove that your staff left it unattended in order for it to be stolen – where are those cameras when you need them?).
  • Leaving money unattended in a vehicle is also excluded. Funnily enough, money stolen after a vehicle accident where the driver or passenger is unable to prevent the theft is covered!

So what then is covered?

Money insurance indemnifies the business owner against loss or damage to money, the most obvious risk being theft. Money destroyed in a flood or fire is another risk that comes to mind.

What is defined as money?

Let’s first define exactly what money is.
Money includes:

  • Cash,
  • cheques,
  • credit card vouchers,
  • stamps, and
  • Negotiable instruments.

Because cash is such a sought after commodity – in order to qualify for this type of cover – you’d need to have all sorts of systems and procedures in place for the handling of money. For instance, being able to prove the loss via recordkeeping goes without saying. If your ‘takings’ go straight from the till to the mattress then this ain’t your type of insurance!

Be careful when it comes to cheques

Remember that strict and accurate recordkeeping of money is an absolute.

Cheques would need to be marked as ‘non-transferable’ and ‘non-negotiable’ amongst two or three other important requirements. Failure to comply with these requirements would see a hefty 25% of the loss being for your account.

My feeling is, “who uses cheques anyway? Don’t accept them.” But at the end of the day, it’s your money.

What if they smash your tills?

  • Cash registers, cash boxes, strong rooms, safes, franking machines can all be insured under this insurance!
  • Items of clothing stolen during a robbery can also be insured.
  • Most insurers pick up the tab for replacing locks and keys following a burglary,
  • they will usually also include the replacement of a key if a key disappears or if you have reason to believe that someone is in possession of a duplicate key.

And if you can prove that a skeleton key was used to open the safe…well then you’ve got a valid claim.

What if a staff member is injured during a robbery?

Assault cover can be included in the money section of your insurance.

  • This would pay a lump sum on the death and a percentage of the lump sum upon permanent disability (depending on the severity of the disability).
  • Furthermore, a weekly specified amount will be paid to a person who cannot perform his or her occupation for a period of up to 104 weeks after the incident.
  • Finally, medical expenses are also paid for a specified amount.

What would insurers want to know before taking on this risk?

Insurers will want to know:

  • What is the average amount of money kept on the premises?
  • Do you have a period when the money increases substantially (Think of Christmas where standard monthly turnover could be achieved within one or two days of the month)?
  • When do these periods of increased turnover occur (Provide dates such as the day before Christmas and New Year)?
  • What are your takings during the seasonal increase?
  • How many tills do you have in operation?
  • Maximum float per till
  • What is the value of all your cash registers, safes, cash boxes, etc
  • Will money be kept overnight on the premises?
  • What SABS (South African bureau of standards) category safe is the money stored in overnight? If you store R50, 000 overnight in a cash box then there’s a fair chance that the insurer won’t offer you the cover!
  • How much money is usually in transit to and from the bank?
  • Do you make use of cash collectors or do you do your own deposits?
  • Will you require assault cover, and if so, how much?

Conclusion

A couple of weeks back, one of our clients was followed home and robbed at gunpoint. An hour or so afterwards I got a call from them asking whether they had money insurance.

Chances are that in your business it’s the last thing you think of. In their case they weren’t a cash business , but they still kept a significant amount at home.

If you’re dealing with large amounts of cash on a daily basis then money insurance is something to seriously consider. The big supermarket chains self insure this type of risk, but can you afford to do the same?

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Until next time.

The InsuranceFundi Team

 

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