Call it civil disobedience, or call it riots. Either way, American business owners have paid a heavy price during this time. Citizens have resorted to inflicting chaos in their calls to reform. As a result, firefighters, and other first responders have been put in harm’s way. Some say that insurance will cover all the damages from riots and looting. However, is that true? Join us as we examine this multi-layered conundrum that can mean the difference between the American dream, and bankruptcy.
Does Insurance Cover Damage From Riots?
Mostly yes, but sometimes no. States will have vastly different laws, and loop holes. Let us take a closer look at a few examples that highlight the true meaning of “read the fine print.”
What insurance does not cover
Most insurance policies have a pay out limit cap. Meaning, you are only insured up to a certain dollar amount. Different states have minimum requirements for specific property items. Anything beyond that, you are responsible for. This will mostly depend on how much insurance you paid for. If the cost to demolish a building, or repair structural damage exceeds that amount, the difference may come out of pocket.
Some cities have laws requiring you to clean rubble and debits from your property. Thus, the owner may legally be held liable for those costs not covered by insurance. Mark Reilly, the Managing Editor of the Minneapolis/St. Paul Business Journal wrote, “The costs of demolishing ruined structures and clearing their sites could be far more than their insurance will cover.”
Another consideration, the loss of income
This is very difficult to calculate. Especially, since stores were having low levels of foot traffic during quarantine. Some policies may base their pay out on these sale receipts. In contrast to what they might have been now that restrictions have been lifted.
If you do not have up to date records, you may not be compensated. Minnesota Department of Commerce states:
It’s important to have your property value assessed before, and periodically thereafter, any type of property insurance coverage is purchased. Be sure to keep copies of receipts for equipment, furniture and other valuable items in the event your premises are destroyed. Keep physical photos of your property in another location as well as digital pictures that you store on your computer or with a Web service.
Lastly, we want to highlight that some cities are self insured. For example, if a public building is burned down, tax dollars will be used to make repairs. This is money is typically from a reserve fund, and is not “free money.”
What insurance does cover
The California Department of Insurance also has an entire section dedicated to insurance during civil unrest. They lists the following guidance on their website:
Standard commercial policies typically include coverage for physical loss or damage to the insured premises and other business property resulting from looting, vandalism, and riots. Whether a specific loss will be covered depends on the actual language in the applicable policy and any coverage exclusions that may apply. It is important to check your specific insurance policy…
They go on to say there are many different considerations:
- Vandalism, Malicious Mischief
- Riot and Civil Commotion
- Business Income Coverage
- Civil Authority Coverage
- Glass Coverage
- Auto Insurance
- Homeowners’ & Renters’ Insurance
Also, to get a pay out, the policy holder must must abide by terms set forth in the agreement. These include:
- Preservation of Property
- Reporting Claims Immediately
- Tracking Expenses and Saving Damaged Property
- Documenting Communications with Insurance Agent, Adjusters, and Insurance Company
- Hiring Approved or Licensed Contractors
- Abiding Within Grace Periods for Paying Premiums
- Contacting Governmental Departments for Assistance or Guidance in Certain Situations
Each one of the dozen plus aforementioned bullet points have at least a paragraph of elaboration, and legal definitions attached. Ultimately, this is just a fancy way of saying, “It depends, check the fine print.”
Many Americans will eventually receive some sort of compensation. However, a number of small business will not receive enough to salvage their dreams. Particularity those in areas of lower income who could only afford the most basic insurance policies. The volume of claims will also slow down pay outs. For example, Minnesota has reported damages of over $500 million. Consequently, Law enforcement is current offering cash rewards for information of certain crimes.
Do you have anything to add? Do you know any examples where insurance was a factor? Sound off in the comments below! Please keep things civil, and respectful. This is an issue we are all passionate about. Nevertheless, mature conversation furthers dialogue, and riots lead to crushed neighborhoods. If you have prevalent issues, contact your Congressperson. You can find a helpful guide we put together be clicking here.