When your place of business suffers significant damage, it can be difficult to get it back up and running. Let us work with your insurance company and we’ll help you navigate this difficult situation. If you’ve experienced a loss, contact APA for a free consultation.
When Protests Are Not Peaceful
The current news is particularly chilling, and it is made even more so given that many persons have had to watch their means of livelihood taken away because of the Covid 19-induced lockdowns. And now this, just when many were hopeful that their businesses would be able to open with some semblance of normalcy.
However, although carriers have generally resisted coverage for loss arising from the virus, loss arising from rioting/looting is usually covered. Of course, there are exceptions, and you will have to read your policy or contact your insurance professional to be sure.
Let’s look at coverage provided by standard insurance forms for commercial property. Most business owners today will have coverage for vandalism (shattered windows, graffiti, destroyed showcases, smashed furniture, torched buildings, and the like). A basic insurance form states that loss arising from “riot or civil commotion, including…. looting occurring at the time and place of a riot or civil commotion” is covered. Other open peril policies, that is, those in which loss is covered unless specifically excluded, do not mention that loss from rioting or looting is covered; they simply do not exclude such loss. If you are insured on a businessowners policy, the same will be true as to coverage for loss arising from rioting and looting. (A businessowners policy includes both property and liability coverage. A commercial property form covers property only; liability coverage must be separately purchased.)
Having said that loss from looting is covered, we must be clear that there is not unlimited coverage for theft. There are often limitations for theft of furs, glassware, jewelry, stamps, and tickets (think travel agency). And, of course there will be limits on any money stolen. Again, consult your policy or your insurance professional.
Now for business income coverage. If your place of business has been directly damaged by rioters, then there should be coverage for loss of business income (and again, consult your policy for the applicable limit).
The question, though, on many businessowners’ minds is whether there will be coverage for business income when there is no direct damage to their own premises, but a curfew imposed by civil authority means there is no walk-in business, or that the business must close early so that staff can leave to avoid the curfew. The answer is, “it depends.” Here, we turn to the coverage called, generally, “civil authority.” The wording will often be something like “when a covered cause of loss [i.e., rioting or civil commotion] causes damage to property other than property at the described premises [that is, the insured premises] we [that is, the insurer] will pay for the actual loss of business income you sustain and necessary extra expense [that is, money spent to avoid covered business losses] caused by action of civil authority that prohibits access to the described premises…”
This sounds straightforward enough, but there are two conditions that must be met. First, access to the area immediately surrounding the damaged property must be prohibited by civil authority because of the damage, and the insured premises must be within the area but not more than one mile from the damaged property; second, the action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the covered cause of loss (i.e., the rioting) that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.” For example, if a large block of buildings has been set afire then a curfew could be called to allow firefighters to reach the buildings.
The coverage for loss of business income in the instance of civil authority has a time deductible (usually 72 hours) after the time the curfew is called until this coverage applies, and generally it will apply for a period of up to four consecutive weeks. In the case of extra expense, though, that coverage begins immediately after the time of the first civil authority action prohibiting access.
Once again, please check your policy. Another coverage form reviewed did not impose a geographic limit for property damaged at other than the insured premises, but did limit coverage for business interruption caused by civil authority to two weeks.
And remember, Allied Public Adjusters is always ready to assist you. Please stay safe!