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Dawson and Rosenthal
Dawson and Rosenthal

Does Business Insurance Cover Riots And Looting?

Right now, the United States is going through a pivotal moment in its history. Not only are we dealing with an unprecedented global health crisis with the COVID-19 pandemic, but there has also been significant civil unrest in the aftermath of the death of George Floyd in Minnesota. As evidenced by sustained news coverage, there have been instances of rioting and looting in various places around the country, including here in California. If you are a business owner, you may be wondering whether or not your business insurance covers damage sustained due to rioting and looting.

Are businesses insured for riots?

What often starts as a peaceful protest can often turn into significant unrest. If a riot breaks out, the situation can become unpredictable and get out of hand rapidly. In many right situations, law enforcement is not able to regain control of an area quickly enough before significant damages and looting occur to businesses.

In general, a standard business owner’s policy (BOP) will cover damage to the physical portion of a business and its internal contents caused by fire, civil commotion, riots, or vandalism. This type of coverage can be incredibly beneficial if there is civil unrest in your area. As we have seen on TV recently, businesses can sustain a significant amount of damage in a short amount of time after a riot breaks out.

Will a loss of income be covered under a standard policy?

Property damage is not the only thing that business owners need to be worried about when there is civil unrest or looting. In some cases, businesses are forced to suspend their operations or limit the hours they are open due to the rioting. Closures and shortened hours may be a choice made by the business owner, or they could be forced by civil authorities (forced closures, curfews, etc.).

If this happens, a business will likely lose income. Any loss of income can lead to a business owner not being able to pay their employees, suppliers, landlords, and more. However, a business owner may be able to recover compensation for lost income under a separate policy known as “business interruption insurance.”

This type of coverage is not always standard with a business insurance policy. However, business interruption insurance been in the spotlight ever since the COVID-19 pandemic began to affect business operations across the state. Business interruption insurance will typically cover lost income caused by rioting and looting so long as there is direct physical damage to the premises. Coverage may also be provided if there is a “civil authority provision” in the business interruption policy if a business cannot operate due to the actions or orders made by government authorities.

Speak to an attorney about your case

These are incredibly challenging times for businesses in California and throughout the United States. During times of unpredictability, it is good to know that your business insurance policies will pay if your business operations are interrupted by rioting or looting. However, if your business insurance carrier refuses to pay a valid claim made against the policy, you may need to speak to a skilled San Diego business interruption attorney familiar with bad faith insurance practices. An attorney will have the resources and experience necessary to dissect your policy, negotiate with the insurance carrier, and secure the coverage you need.