Reviewing Riot Exclusions

Recent, well-reported acts of rioting across the nation have resulted in extensive damages to commercial property. Entrepreneurs have suffered losses to their buildings, their equipment, and their inventory. Many businesses have suffered lost income due to government-ordered curfews and shutdowns.

Many insurance policyholders are surprised to learn that their policies cover damage caused by riots. In addition to property damage and loss of income due to riots and civil commotion, most commercial insurance policies reimbursed the insured for losses ranging from destruction of windows and storefronts, arson, stolen inventory, damage from graffiti, and the cost of removing debris. Commercial insurance may also include coverage for losses caused by interruption of business. The income businesses lose due to the curfews imposed during riots may be covered.

But no policy offers reimbursement for every conceivable business loss caused by rioting, and many policies require proactive measures on the part of the business owner for claims to be paid. It’s important for business owners to meet with their insurance agents to read their policies to get the answers to the following questions.

Does the policy insure the business for “multiple perils?”

Multiple peril policies cover damage for rioting. It’s rare for a policy not to offer coverage for multiple perils, and therefore for damage in riots, but this is a fact you should verify with your agent.

Does the policy cover property loss for actual cash value, fair market value, or replacement value?

Some property depreciates, losing value through the years it is used. Some property gains value despite increasing age, or because of increasing age. It is important to know what kind of coverage the policy affords in order to know whether to gather appropriate documentation of loss outside a typical depreciation schedule.

Does the policy cover revenue lost during business closure?

Overhead expenses don’t go away just because a business is shut down during a riot. The mortgage, utilities, loan payments, payroll, utilities, and relocation expenses continue. If the government requires all businesses on your block or in your neighborhood to close, or if rioters do so much damage that your business has to close, you need to know whether you are covered.

Does your policy require you to take proactive measures to limit property loss?

Policies may require businesses to board up windows, hire security personnel, shut off utilities, or move especially valuable assets to protect them from damage when civil unrest is imminent.

If your policy covers business disruption, is there a waiting period?

Many policies impose a 72-hour waiting period before businesses can file a claim for lost revenues. It’s important to know what kind of documentation the policy requires regarding when that waiting period starts.

And does your policy protect you from liability claims that may arise on account of rioting?

Injuries occur during riots. An injury that occurs on your property, even if it could not possibly be your fault, may result in a liability claim. Simply consulting an attorney to get a claim thrown out in court can be a significant expense at a time the business is under tremendous expense.

Your insurance agent is the best source of information and explanation about the coverage in your commercial policy. Especially for the complicated issues of riot exclusions, it is important to seek your agent’s advice before you need to file a claim.