Riots And Insurance

Riots in London and other major cities across the United Kingdom have left many individuals and businesses with damaged or destroyed property.

The latest from the Association of British Insurers (ABI) puts the estimated insured losses from the urban unrest at well over  £100 million ($163 million). Check out this Business Insurance article for more details.

Watching the destruction unfold online and on TV I had to wonder, if a similar outbreak were to occur near my U.S. home, would  I be covered?

The good news is that standard homeowners insurance policies generally cover a wide range of potential disasters, including fire, riot or civil commotion, and vandalism or malicious mischief. This I.I.I. chart lists what type of disasters are covered.

Of course, it’s always best to check your individual policy for coverage details and exclusions.

As for U.S. businesses, commercial policies generally cover riot-related property damage.

When it comes to business interruption coverage, insurance will compensate you for lost income if your company has to vacate the premises due to disaster-related damage that is covered under your property insurance policy, such as a fire. However, if a business is forced to close early due to a city-imposed curfew, business interruption coverage would not apply for the lost income.

While rioting is rare, when it does occur, the damages can be costly to both people and property. The 1992 Los Angeles riots in the wake of the Rodney King verdict caused some $775 million in insured losses and still rank among the largest U.S. manmade disaster losses.

It’s interesting to note that U.S. property insurers of last resort, also known as FAIR plans, were born out of legislation passed by Congress following the 1967 urban riots.

More on the history of property insurance pools and riots can be found in the I.I.I. issues update on Urban Insurance.

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