Mercantile Safe Burglary

What is 'Mercantile Safe Burglary'

Mercantile safe burglary insurance refers to coverage for money, securities and other assets that are stolen from a safe, vault or other locked container. Actually, it is an outdated form of insurance coverage that was purchased by businesses who used safes, and was included in commercial property insurance policies.

BREAKING DOWN 'Mercantile Safe Burglary'

Mercantile safe burglary insurance hearkens back to an era, before the rise of credit cards and electronic payments, when businesses conducted most of their transactions in cash (or with paper checks). This cash, along with other valuables that the business wanted to protect, was stored in a safe (or some sort of locked chest or cabinet) overnight for protection. Safes presented a target of opportunity for burglars who would use tools, explosives and other means to open them. Because the loss of cash and valuables could severely damage a business’ ability to stay open, obviously, merchants and shopkeepers would purchase mercantile safe burglary insurance.

Mercantile safe burglary insurance covered not only the assets that may be stolen from a safe, but also property that may be damaged when the business was illegally or forcibly entered. For example, a thief might break a lock or window to gain access to the premises; or use dynamite to blow open a vault door, which in turn severely damage other parts of the building. Coverage was limited to the hours after a business was closed for operation.

Insurance companies offering mercantile safe burglary insurance typically charged policyholders lower premiums if they installed security systems, hired security guards, and took other precautions to increase safeguards for their valuables. The policy document required the policyholder to provide in-depth information about the type of safe or vault used, including the manufacturer, serial number, style and size.

Banks, which also used vaults and safes to store cash and valuables, typically did not purchase mercantile safe burglary insurance. Instead, they purchased bankers burglary insurance, since this type of insurance extended coverage to daylight hours when a robbery may occur.

History of Mercantile Safe Burglary Insurance

In the U.S., insurers began offering the coverage in the mid-1890s, and the policies grew along with the new 20th century: Premium volumes rose from $48,360 worth in 1894 to $4,225,594 in 1914, according to Burglary Insurance Statistics, a period reference work written by a Fred S. Garrison, an assistant secretary of the Travelers Indemnity Company (and apparent authority on the topic). By 1922, the coverage "is a form that is steadily becoming more popular," as he wrote in an article for The Economic World, an insurance industry publication – though "one of the greatest difficulties is that shopkeepers will not carry a sufficient amount of insurance," he lamented.

However, mercantile safe burglary insurance fell out of favor and gradually became obsolete as the insurance industry changed the way it provided coverage for commercial property insurance in general and crime affecting commercial enterprises in particular.