I recently read in my local paper that nearly 600 businesses in the Twin Cities were damaged during the riots following George Floyd's tragic death on May 25, 2020. Although it's still too early to fully grasp the financial impact of that unrest, insurance companies are already predicting record losses from that incident.
As I was out on the streets reporting on these events, I overheard several people justifying property damage as a form of protest, arguing that since insurance companies will cover it, it’s not like they're harming anyone. This made me wonder: How will the businesses affected by these riots recover? What happens to people whose cars were parked outside their homes? Will insurance really "cover it," or will their lives be forever changed?
So, I dove into some research and reached out to lawyers across the country for answers.
Here’s the bottom line:
- Businesses are generally covered against civil unrest, looting, vandalism, and arson through their business/commercial property policies.
- Vacant buildings may not be included in coverage.
- Homeowners are typically covered, though certain policies might exclude "business" property kept at home, like a dedicated work laptop.
- Renters are only covered if they have a renters insurance policy. The landlord likely has a policy covering the building and fixtures, but not the tenant's personal belongings.
- Cars are usually covered under the "comprehensive" section of an auto policy (not the "collision" part).
- Many policies specifically exclude acts of "terrorism."
- Since the definition of terrorism can be vague and politically charged, insurance companies might try to use political rhetoric as a way to avoid paying claims.
- Even when coverage applies, don't expect full reimbursement. Having rainy-day funds is crucial!
- Always read the fine print carefully; insurance companies aren't necessarily your allies. If you believe your claim is valid but denied, consult a lawyer immediately.
One important distinction to keep in mind is the difference between who owns the building and who owns the contents inside. Policies tend to reflect this division.
A building owner almost always has insurance covering the structure and attached fixtures, regardless of whether it's a commercial or residential property. However, a tenant does not automatically benefit from the landlord's policy. If you're renting and don't have your own renters' insurance, you won't be covered unless you secure separate insurance.
Conversely, some homeowner's policies might exclude certain unattached items inside the building. For instance, one of our homeowner's policies only covers up to $5,000 worth of "business property" kept at home, which could pose problems for those working from home or storing additional inventory.
Commercial properties are usually covered during riots. According to Steven Mikuzis from Mag Mile Law in Chicago, "Riot is a covered peril under even basic property insurance policies." Vandalism is also typically covered unless the building is vacant.
But as straightforward as this sounds, some insurers may still contest coverage. K.C. Williams from Williams Law, P.A. in Tampa, FL, noted, "Some insurance companies look for ways not to pay rather than reasons to cover." While "riots" or "civil commotion" might justify coverage, insurance attorneys often scrutinize the fine print to deny claims.
This isn't meant to incite distrust towards insurers, but it’s wise to proceed cautiously. Assumptions about coverage can lead to disappointment. Insurance companies sometimes promise coverage knowing they won’t face significant opposition, leaving claimants to wonder how much they'll actually receive.
Even with coverage, don’t expect full compensation. Tina Willis from Tina Willis Law in Orlando, FL, emphasized that while companies may offer coverage, they tend to underpay claims. People often let their guard down after hearing promises of coverage, assuming fairness from their insurers.
The Terrorism Risk Insurance Act (TRIA), enacted in 2002 following the 9/11 attacks, introduced federal assistance for terrorism-related claims. When the Treasury certifies an act of terrorism, the government reimburses insurers for approved claims. This sounds great, but there’s a catch: what qualifies as terrorism?
During the Black Lives Matter protests in May-June 2020, President Trump labeled Antifa as terrorists, suggesting their actions constituted domestic terrorism. Attorney General William Barr echoed these sentiments. Despite law enforcement debunking Antifa as an organized entity, these declarations muddy legal waters regarding insurance claims.
Even without official certification, insurers might exploit political statements to deny claims. They might assume ordinary people lack the knowledge or resources to challenge them in court.
Homeowners, renters, and vehicle owners also face coverage complexities. Most standard homeowner and renters' policies cover "perils" like fires, thefts, and explosions, meaning riot damage is usually covered. Some policies include catastrophe insurance to protect against terrorist attacks or riots.
Renters depend on their landlords' policies for structural damage. Personal property losses fall to renters to insure through separate policies. As attorney Erik Jacobs from Rockford, IL, explained, "If your building burns down and you lack renters' insurance, recovering lost personal items can be impossible."
Car insurance also covers riots, especially with comprehensive coverage for newer vehicles. This coverage extends to non-collision incidents like vandalism or natural disasters.
Documentation is key! Relying solely on verbal promises from salespeople is risky. Regularly review and update your insurance documents. Take photos/videos of your property and document receipts and serial numbers of valuable purchases.
In uncertain times, thorough documentation can save you significant stress and expense.
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