Does Business Insurance Cover Riots and Looting?

The past year has made many businesses worry that they will become the next to be impacted by bouts of civil unrest, riots or looting. You might be wondering if insurance will cover the damages that could occur at your properties.

Fortunately, most standard commercial insurance policies cover the cost of damage associated with riots and looting. Property damage caused by civil commotion and vandalism is generally covered under many business insurance policies.

This would include damage caused by rioters as well as business interruption caused by police and civil authorities during such an incident. Of course, coverage varies depending on your policies and your carrier.

In this post, we discuss which businesses need coverage for civil disorders and which types of business insurance cover riots and looting.

What Businesses Need Coverage for Civil Disorders?

The limitations of insurance and the process of reestablishing operations became major hardships for many brick-and-mortar businesses in 2020. Civil disturbances can pose significant risks for many companies, but business owners can protect their assets with the right insurance coverage.

Businesses with property in urban areas are especially susceptible to losses due to riots, civil unrest or vandalism. A small business in an area that has seen rioting and looting faces not only rebuilding costs, but also a wait for customers to return.

Restaurants, too, could have specific risks inherent to their business property that require them to purchase individual coverages for riots and looting. Some policies cover inventory separately, and some businesses like jewelers or art galleries carry specialty policies that have specific limitations.

Small businesses need coverage for civil disorders when there is a potential for rioters or vandals to cause physical damage to your building or property. People may break into your location and loot property, including your inventory or merchandise. You may lose income if people damage your property and you cannot operate regularly until repairs are finished. You lose income if a civil authority closes access to the area where you do business.

Luckily, if your business is damaged from arson, violence, vandalism or burglary, a standard commercial insurance policy will help cover the costs. Which damages an insurer will cover – and how much of it – depends on your insurance plan and your management of claims.

The best way to prepare is to contact your broker, agent or insurance provider to understand exactly what your policy covers if your business suffers due to riots and looting. Make sure to ask for specific details, including the type of damages covered, how much you would be compensated, and how to file a claim properly if this occurs.

What Types of Insurance Cover Riots and Looting?

Businesses most commonly have general liability insurance, property insurance, and workers’ compensation insurance. Most of these standard business insurance policies will cover damages in the event of riots and looting. But different types of insurance and policies may protect you in different ways.

Here are types of insurance that cover riots and looting:

• Property Insurance: Commercial property insurance covers physical damage resulting from vandalism, rioting and civil unrest. These policies are typically used for damage to a business' doors, lighting, windows and contents, such as furniture, office supplies and machinery. Commercial property insurance also usually covers the cost of boarding up broken windows and securing the location from further damage. However, a policy that does not offer “replacement cost” might not reimburse the entire amount needed to restock and rebuild.

• Business Interruption Insurance: Part of commercial property insurance and most business owner’s policies (BOPs), business interruption insurance (also called business income insurance) will help cover income that you lose if you need to adjust hours or temporarily close. This coverage typically is triggered only if the business’s premises are physically damaged. Business income coverage includes both net income and the cost of continuing normal operations. Note: Business income coverage is usually subject to a 72-hour waiting period.

• Workers’ Compensation Insurance: If your employees are injured on the job during an act of rioting or vandalism, a workers' compensation policy can cover their medical care. It could also compensate them for time taken off to recover or while your business is shut down.

• Business Owner’s Policy: Most business owner's policies (BOPs), which combine general liability, property and business interruption coverage, will cover damages to your physical commercial property and its contents in such an event. This typically includes damage to exteriors, doors, lighting, windows and interior damage, along with broken or stolen contents such as computers, machinery, furniture and office supplies. Businesses using a BOP can often opt-in for additional coverage for criminal activity, spoilage of inventory, and other incidents.

• Commercial Auto Insurance: If your company’s vehicles are damaged or destroyed, a commercial auto insurance policy can cover costs for most of these damages. Riot-related or vandal-related damage to vehicles, whether owned by the business or employees, is covered under the optional comprehensive portion of these business auto insurance policies. Comprehensive coverage typically also covers broken windshields.

How to Use Coverage for Riots and Looting

Here are some tips on how to use coverage and file claims for damages related to civil unrest, riots and looting:

• Read your policy: BOPs, property insurance and business interruption insurance vary, so it is vital to speak with your agent, broker or insurer to understand your coverages and liabilities.
• Report claims quickly: Policyholders should report claims to their insurer as soon as possible – whether directly or through your broker – so the claims process can begin. Generally, policies require that claims related to criminal behavior also be reported to law enforcement.
• Document the damage: Take photos and videos of the damaged property, especially if it must be discarded, so insurance adjusters can look at the evidence. Keep receipts for expenses from temporary repairs that allow you to restore operations or protect your property from further damage.
• Prevent further damage: When safe, businesses should secure the property against further loss by boarding up shattered windows and securing inventory. Costs for securing property against further loss is usually covered by business insurance policies. However, you should not make permanent repairs to your business locations until an insurance adjuster has inspected the damage.

After speaking with your broker or carrier and finding out what your policies cover, you may want to pick up additional commercial coverage that protects your business and your employees. Every business should find a reputable broker or agent that specializes in commercial insurance to find out which policies best protect you in the unfortunate event of civil commotion, riots and looting.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and learn more about insurance brokers here.

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