Protests have raged across the United States over the death of George Floyd, an African-American man who died in police custody when an officer pressed his knee into his neck until he asphyxiated. But what began as peaceful demonstrations has become violent as riots break out in many large cities.
Some have accused outside actors from corrupting the movement, but the fact remains that property damage has become a serious problem across the country. Places like Minneapolis, Chicago, New York, and Los Angeles have seen windows broken out, looting in small and large businesses, automobiles flipped over and burned, and general mayhem.
Will Insurance Cover the Damages?
The most expensive event as a result of civil unrest was the riots in Los Angeles after the death of Rodney King in 1992. Adjusted for inflation, those damages amounted to $1.42 billion. But because the vandalism has taken place in almost 30 major cities, estimates are that these disturbances will far exceed that number. The National Guard has been deployed in 24 states to help restore order, but that will still leave countless businesses to clean up the mess.
If there is good news in all of this, it is that the typical business property insurance policy will cover the damages. Windows that have been broken, merchandise that has been carried off falls under the average policy. Business interruption insurance policies typically cover civil authority issues, such as riots and curfews. So shops that had to close as a result of the riots will be compensated by their insurance policies until they can resume business.
Coronavirus & Civil Unrest
Unfortunately, the COVID-19 pandemic adds another wrinkle to this situation. Most states remain in some form of lockdown for businesses, with some not even able to open. Some businesses have allowed their policies to lapse during the Quarantine, whether because they could not open yet, or because they were not covered under the pandemic.
Only forty percent of businesses have interruption insurance, so there will not be as much help as many would like to see. When the policies are activated, it is likely that coverage will be for projected income as opposed to past income, because there are no recent numbers to compare to for an accurate evaluation.
It is also very likely that there will be litigation on these issues. Some insurers have pre-emptively declared that they will not be covering the effects of the riots. This may not hold up in court, but it presents another obstacle for these already-harried businesses. Until these crises abate, the market will continue to harden, and insurance will become more difficult to obtain, and perhaps to claim as well.