As protests around the country descended into rioting and civil unrest, many businesses that have been looted, or seen their shops damaged or completely destroyed, will obviously be turning to their insurance to file a claim.
While many companies were unsuccessful in filing business interruption claims for the COVID-19 crisis, claims for damage and theft from rioting and looting are more likely to be paid. A number of coverages will come into play depending on the damage and lost income a business suffers at the hands of rioters, vandals and looters.
Standard commercial property policies cover damage to a business property caused by fire, explosion, riot or civil commotion, vandalism or malicious mischief. This would include coverage to the structure of the business, as well as any inventory, fixtures and other contents. Business owner’s policies also include this risk.
The business personal property coverage portion of the policy would cover damage and theft if rioters break into a real estate office, for example, and steal computers, burn furniture and destroy office equipment. That said, the damage would be subject to limits (specific or blanket), as well as any deductibles required by the policy.
Commercial vehicle damage
Automobiles are covered under the optional comprehensive portion of a commercial auto policy, which you should have for all your vehicles. This will pay for damage to the vehicle and its contents caused by fire, falling objects, vandalism or rioting.
Comprehensive coverage will cover the gamut and will pay you if a vehicle is:
- Damaged, or
- Destroyed (for example, burned).
One of the most common damages to vehicles during riots is broken windshields, which you can usually get covered with an optional glass coverage rider.
Business interruption coverage
Companies that are forced to close as a result of riot and looting damage may have coverage for business interruption under a business property policy.
The policy may also cover lost income because a business had to close after riots. It would often cover dependent properties or have contingent business extensions of coverage. Also, coverage can apply if a business suffers a loss of income because of curfews or if authorities bar access to a property.
Coverage is typically triggered if there is direct physical damage to the premises.
You should note that many policies require a 72-hour waiting period before a policyholder can begin making a claim. That’s because the first three days of business shutdown, access constraints or limited hours of operation because of a civil authority action are often excluded from coverage.
There may also be a limit to the claim period. A standard limit is up to three weeks of losses.
Filing a claim
When filing a claim, read your policy in its entirety to determine how to best present it. It’s important to understand the policy’s limits and deductibles before spending time documenting losses that may not be covered.
If you are going to file a claim, document all damage. You should have receipts for all your inventory and fixtures. Here’s what you should do:
- Take photos of all damage.
- Contact your agent and file a claim immediately.
- Clean up to protect your building, but do not make major repairs until you talk to the insurance company.
- Keep receipts for any remediation work.
If you’re going to file a business interruption insurance claim, you will need:
- Pre-riot financial statements and income tax returns.
- Post-riot business records.
- Copies of current utility bills, employee wage and benefit statements, and other records showing continuing operating expenses.
- Receipts for building materials, a portable generator and other supplies needed for immediate repairs.
- Paid invoices from contractors, security personnel, media outlets and other service providers.
- Receipts for rental payments, if you move your business to a temporary location.
A final thought
Filing a business interruption claim is not easy, particularly when estimating losses. The process is highly complex and can be contentious. If the insurer disagrees with your loss estimates, they may have specialists audit your claim.