Riot-Related Damage, Income Losses Covered Under Most Business Owners' Policies
Prior to the riots in Minneapolis, Minnesota, the costliest U.S. civil disorder occurred between April 29 and May 4, 1992, after police officers involved in the brutal beating of Rodney King were acquitted. The five days of rioting caused $775 million in insured losses.
June 30, 2020 at 10:07 AM
8 minute read
Following the deaths of George Floyd, Breonna Taylor, Ahmaud Arbery, Tony McDade and Rayshard Brooks, protests against systematic racism in general, and police brutality in particular, have swept the globe. While these protests have largely been peaceful, a small, group of individuals unaligned with the goals of these peaceful protests has used the protests as cover to incite violence, damage property and vandalize businesses.
Prior to the riots in Minneapolis, Minnesota, the costliest U.S. civil disorder occurred between April 29 and May 4, 1992, after police officers involved in the brutal beating of Rodney King were acquitted. The five days of rioting caused $775 million in insured losses. See Insurance Information Institute, Facts + Statistics: Civil Disorders, https://www.iii.org/fact-statistic/facts-statistics-civil-disorders (last viewed June 18, 2020). More recently, there were approximately $24 million in insured losses following the death of Freddie Gray, a Black American who died after suffering a spinal cord injury in police custody, which the medical examiner ruled a homicide. Insured losses are not yet available for the riots in Minneapolis, but the Property Claims Services (PCS) unit of Verisk Analytics designated the event as a catastrophe. On June 4, PCS included over 20 other states, making the civil unrest that started in Minnesota a multistate catastrophic event that is expected to exceed $25 million in insured damages.
Fortunately for affected business owners, most have insurance that protects their pecuniary interest. "All Risks" commercial property insurance policies cover all loss arising from a fortuitous (i.e., accidental and unexpected) cause unless expressly excluded. These policies rarely exclude losses arising out of riots, civil commotion or similar acts. Instead, in many policies, riot, civil commotion, vandalism, looting during riot or civil commotion, and malicious mischief are "specified" or "covered" "causes of loss." The practical effect of these designations is that numerous exclusions that may otherwise apply will contain exceptions for loss caused by these situations.
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