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Everyone saying that destroyed businesses have insurance and so will not suffer any loss, that's not necessarily true. I do a lot of insurance coverage in my law practice.
MANY policies contain exclusions for riots and civil breakdown.
MANY policies contain exclusions for riots and civil breakdown.
In such cases, the policyholder would receive nothing.
Other policies might cover physical damage, but not cover business interruption. That means that the physical loss might be covered, but for the months it will take to rebuild, the business will have no income.
Other policies might cover physical damage, but not cover business interruption. That means that the physical loss might be covered, but for the months it will take to rebuild, the business will have no income.
Coverage and exclusions aside, many of these buildings suffered a total loss. That means that deductibles, policy limits, and self-insured retentions come into play almost certainly.
You can't just say INSURANCE! and think it's a guarantee against anything bad happening. It all depends on the language of a particular policy. Two identical looking buildings right next to each other could be destroyed, and one might have coverage and the other doesn't.
When I get a new case, the first thing I do is ask for the full policy. It's usually hundreds of pages long. I read the whole thing. Every word matters.
Insurance companies tend to cover losses they can model and predict, like storm damage. If it's harder to price a particular risk of loss--such as a riot--you're more likely to find exclusions and policy limits for that event.
Bottom line is that I'd wager some businesses impacted by the riots will have very generous coverage, other businesses will get something but will still experience considerable financial loss, and some will have no coverage and be destroyed forever.
Don't take this as a judgment of the protesters. I just want folks to know that insurance isn't a magic wand.
Ok, fine, one more note to explain why some businesses will get *some* coverage but still suffer big losses.
If protesters loot and burn down your building, here's the possible coverages that might be implicated:
1. Damage to the structure itself -- the building.
If protesters loot and burn down your building, here's the possible coverages that might be implicated:
1. Damage to the structure itself -- the building.
2. Damage to the contents of the building. Your business possessions, records, signs, etc. Also, your inventory. Depending on the policy, these items may be wholly covered, partially covered, or excluded.
3. Business interruption. Rebuilding will take time.
3. Business interruption. Rebuilding will take time.
4. Worker's comp. Your employees might have been injured. If you provide health insurance, that could be implicated too.
5. Liability. You might be sued for any number of things in the wake of the destruction.
5. Liability. You might be sued for any number of things in the wake of the destruction.
You might also be sued for breach of contract for failing to deliver promised goods or services to clients, although that would not normally be covered by a liability policy, but might be covered by business interruption.
So you take all of these different types of coverage, and each type has its own policy or own large subsection of a policy, with its own terms and conditions, deductibles, etc.
E.g., you might wholly recover for your building structure, but not recover anything for your merch.
E.g., you might wholly recover for your building structure, but not recover anything for your merch.
Some exclusions--like riot and civil commotion--might apply to some types of coverage, but not others.
It all depends on the language of the policies at issue.
It all depends on the language of the policies at issue.
OK ONE FINAL NOTE -- many businesses already have open insurance claims due to coronavirus-related losses. But now, you have huge additional losses. Many policies have limits on the amount that can be recovered per occurrence or per policy period.
Insurance policies: You cannot discuss this stuff "generally." Each policy is way too different. Your coverage all depends on the particular language of each policy. You must:
