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Will My Insurance Policy Cover This? Damage to Businesses Caused by Riots & Insurance Coverage

by | Jul 10, 2020 | Uncategorized

Now you can smash all the windows that you want
All you really need are some friends and a rock.

Dead Kennedys

In the wake of national protests and riots in response to the death of George Floyd on May 25, 2020, many property and business owners wonder if the damage done by rioters would be covered by their insurance policies. In some major cities such as Minneapolis, Chicago, Los Angeles and New York, rioters responded with violence, vandalism, looting, and even arson. Some have indicated that this could be one of the most expensive civil disorders in U.S. history in regards to nationwide damage.    

Generally, with few exceptions, property damage caused by riots, civil commotion and vandalism are covered under standard auto, business, and homeowners insurance policies, although deductibles and other out-of-pocket costs may apply. Specific types of coverage and limits vary depending on the policy.    

Homeowners Insurance

A standard homeowner’s policy will typically cover damage to the property caused by fire, explosions, riots, and civil unrest, vandalism, or malicious mischief. This coverage usually includes damage to the structure of the home and personal possessions. Most standard homeowner’s policies and rental insurance policies will also cover the costs of additional living expenses. These include expenses like those associated with living away from home in the event that you cannot live at your home because of damage such as hotel bills, restaurant meals, and any other expenses incurred while your home is being repaired.

Automobile Insurance

Generally, damage to cars is covered under the optional comprehensive portion of an auto policy.  These types of policies provide reimbursement for damage to the vehicle and its contents that are caused by fire, vandalism, riots, or falling objects.  Some companies may even offer glass/windshield coverage without a deductible.  Most drivers opt for this type of automobile coverage.

Business Insurance

Business owners may seek insurance coverage for any physical damage done to their property and/or the costs of interruption or suspension of business in connection with that damage.  Damage to the physical structure of a business and its contents caused by, for example, fire, riots, civil commotion, or vandalism, is generally covered by a standard Business Owners Policy (BOP).  Small-business insurance policies generally cover damage to windows, doors, light fixtures and contents, including furniture, office supplies, machinery and computers, plus the cost of boarding up windows and securing the business.

A BOP often combines property, liability and business interruption coverages for small to midsize businesses.  “Normally, companies with 100 employees or fewer and revenues of up to about $5 million or less are candidates for a BOP.  Some types of businesses, like restaurants, for example, may not be eligible for a BOP because of the specific risks inherent in the business.  These types of businesses should consider purchasing individual coverages separately as opposed to the regular package deal.

Also, business owners may add an endorsement or rider to a commercial insurance policy to extend coverage in the event that there are business interruption losses. Unfortunately, surveys indicate that only about 40% of businesses nationwide have this type of coverage.  Business interruption insurance is a type of business income insurance that may be available to businesses that are forced to suspend operations or limit hours due to rioting. Similarly, a civil authority provision can be added to a business policy which provides coverage for lost income and extra expenses in the event that the police department or fire department bars access to a specific area as a result of direct physical damage caused to a nearby business by a riot or civil commotion. Civil authority insurance is often subject to a 72 hour waiting period (a type of deductible) and covers income lost during a limited period of time, typically four weeks. However, you can extend this time period by paying an additional premium.

Although damages associated with the recent uprising across the country in response to George Floyd’s death coincide with business interruptions due to COVID-19,  the insurance industry has said that business interruptions related to COVID-19 will not be covered within claims connected to civil unrest.  In some cases, a business has to have damage, and in most cases, the business would have had to be open or have reopened after the COVID-19 lockdowns to qualify for business interruption coverage.   For small businesses not covered through insurance, many states and local governments and private groups have created relief fundraisers and grants to assist.

Sadayah Q. DuRant-Brown, Esq. is an attorney and recent graduate of Rutgers School of Law, where she was Editor of the Race and The Law Review Journal.

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