Business Insurance in the Face of COVID: Riot Protection

By: Isabel Malmazada, Phillips Nizer Summer Associate

In the midst of the COVID-19 pandemic in the United States, the unspeakably horrible death of George Floyd in Minneapolis sparked heartfelt protests around the world.  Unfortunately, vandals and looters used those protests as an opportunity to damage property and steal from retail premises. Some large businesses shrugged this off with public announcements sympathetic to the protesters and statements that their losses were not as important as the call for justice.

However, many of the losses were not suffered by large businesses. In Minneapolis, at least 220 buildings have been set on fire. In New York City, Soho, the downtown shopping district, was continuously looted over several days, with many stores ransacked and destroyed; and in the Bronx, small businesses run by African and Asian immigrants, already straining to survive due to the lockdown, were looted of everything of value. In Atlanta, rioters stampeded the CNN headquarters building and looted the Lenox Square Mall. And so it went around the nation.

As the dust settles, the owners of damaged and looted businesses will have to face the extent of destruction to their property and the loss of revenue on top of what they experienced due to the pandemic. Recovery for any or all of these losses under policies of insurance will depend on what coverage was in effect—and on how courts will rule. 

In general, damage to buildings and personal property is covered under BOPs and CPPs. Riots may or may not be a “named peril” in property policies. If rioting is excluded as a named peril in the policy, then it could be included under an “all-risk” policy since those are broader. Damage to company vehicles is often covered under an optional comprehensive portion of an auto insurance policy that would provide reimbursement for damage to vehicles and their contents caused by fire, falling objects, vandalism or rioting.

Furthermore, business interruption insurance protects a business in the event the business suffers physical damage that prevents it from operating. If it is unable to operate due to property damage from rioting, then such an insurance policy should cover its lost revenue.

As with all business insurance policies, the carrier must be notified of the claim within a specified period of time. Therefore, prompt policy review and communication with the insurance company must be a high priority, even while trying to do what is necessary to deal with and recover from the effects of lockdown and riot.