By Brian S. Kabateck
The COVID-19 pandemic forced many businesses across the nation to close due to state-mandated orders, completely changing the way they handled business. And just as they were beginning to reopen, riots and looting following the death of George Floyd in Minneapolis left many businesses dealing with property damage and stolen merchandise, while others, unfortunately, had their buildings burned to the ground. Those in areas impacted by civil unrest may have suffered property damage and business income loss and may be wondering how they can use their insurance to the maximum extent to help their businesses navigate during this unprecedented period.
The death of George Floyd and other African Americans due to police brutality and racial injustice prompted peaceful protests as part of the Black Lives Matter movement, which was led by millions across the country. Unfortunately, other separate groups responded violently through the rioting and looting of small businesses and large retail stores. According to local news reports, at least a dozen cities in Orange County, Los Angeles County, and San Bernardino County issued curfews as looting and fires continued ruining small businesses, who were losing thousands of dollars in stolen merchandise and damaged property. Recent riots happening now in the Pacific Northwest have many business owners concerned about property damage and what their insurance policies would cover during this time.
Fortunately, insurance coverage is usually available for vandalism and theft under standard business property policies and may pay both the repairs and the loss of business income. Vandalism is one of the most common property insurance claims and is defined as the willful and malicious damage to, or destruction of, the policyholder’s property. If vandalism is a ‘named peril’ on the insurance policy, then it’s covered as long as the monetary amount of damages is above the deductible. Damage to windows, doors, lights, and other items that are part of a building should also be covered under the building property coverage included in the policy.
According to a report by the LA Times, the amount of coverage small businesses who were victims of vandalism can get varies widely in terms of deductibles and dollar limits, depending on the type of business and the value of the inventory. Since not all landlords require businesses to ensure their inventory and equipment against loss, some local owners will end up having to cover all of the losses and repair costs on their own. However, for businesses that purchase property coverage, it usually includes losses from civil disturbances.
An American Property Casualty Insurance Association (APCIA) spokesperson stated that riots and riots attending a strike are named perils in property policies unless it is excluded by some special surplus lines form and would be included on an “all-risk” policy as policies are broader. A business that has been damaged due to the recent riots should immediately report the damage to the authorities and obtain a police report. The next step would be to document all the damages with photographs, create an inventory report, record lost income and expenses, and make an insurance claim. CNBC reports that most standard business policies have business interruption insurance, which covers loss of income from an event that disrupts a business’ operations. But the current pandemic might complicate things for small business owners filing business interruption claims.
With the ongoing protests and riots happening in the Pacific Northwest, several state insurance regulators responded by ordering insurers to expedite any property damage claims affected businesses might file. Riot, vandalism, and civil commotion insurance is there to help protect physical possessions and the structural elements of a home and business. When business owners choose a policy, it’s important to take the time to learn exactly what is and isn’t covered, which can help them identify coverage gaps and decide what additional policies they might need to fully protect their business.
It’s important to seek legal help if an insurance provider has unreasonably denied, delayed, or disputed the commercial insurance vandalism claim. When a policyholder submits an insurance claim, they expect their insurance to help them in times of need, but some insurance companies may deny valid claims without an appropriate explanation.
Kabateck LLP assists policyholders with losses of all kinds covered by insurance policies and guides them through the complexities of the claim, coverage issues, and/or lawsuits.
For a deeper dive into this topic check out our Civil Action podcast: YouTube | How Vandalized Business Can Rebound