Looting damage, how much can be compensated by insurance?
These days, insurance companies’ customer service department is extremely busy. This is because many beauty supply retailers were looted during the spread of human rights protests across the United States, triggered by the death of George Floyd.
BNB’s own research has found that more than 150 shops have been damaged in the United States, some of which have suffered irreparable damage, including getting everything stolen or having their store burnt down. BNB collected questions from retailers about insurance that could compensate for lotion damage and asked Sunwoo Inho, a veteran insurance expert with 27 years of experience.
Mr. Sunwoo, in conclusion, affirmed that “the damage can be compensated by insurance. If the damage is proved to be caused by the riot, there is no way you can’t receive it. The damage caused by this incident can be fully covered with insurance.” However, he explained in detail some of the ambiguities and non-compensating exceptions.
To be evaluated as ‘riot damage’
Whether it is defined as ‘riot’ or not is an important question. If it isn’t defined as riot damage, the insurance company has no obligation to compensate. The issue is judged by the government after hearing both claims by the insurance company and the owners. Therefore, retailers should fully prove to the government that the damage they received were caused by the riot. Photos and videos of the affected sites are very helpful, police reports should be made soon as possible, and if the harm has been reported in newspapers or magazines, the article can also be used as important evidence.
Sunwoo added that although he mentioned the Riot rule as an expert, retailers don’t have to worry too much about the situation. Since the incident has already been widely reported in the news and the damage is well known nationwide, most of it can be compensated if owners show the government show the prepared evidence properly. In fact, many stores in Los Angeles have already been recognized by the government as ‘damage by riot’ and have received compensation from insurance companies.
Compensation for closing store during protest period
If your store is closed by riots, the insurance company should compensate for the sales. It the government orders local retailers to suspend operations due to serious developments, the insurance company will give the owners money based on sales recorded before the suspension order. In addition, although this isn’t 100% certain, if a store is judged to have difficulties in operation because of a riot, there is a high possibility that it will also be compensated, even without government’s orders or actual vandalism.
Mr. Sunwoo said, “there is a bit of grey area here, and the local government usually judges by common sense… for example, it a store just one block away from the riot scene is closed, it is possible to receive insurance money, even if the judgement is arbitrary.
How to get insurance coverage quickly
Mr. Sunwoo emphasized communication with insurance companies as a tip for handling insurance. It is important to quickly show the evidence you have to the insurance company and be in close contact. The companies that are unable to make on-site visits due to COVID-19 rely on phone calls and e-mail for everything, and late contacts can result in very delayed insurance processing.
Mr. Sunwoo also mentioned, “Usually, if the evidence such as paperwork, photos, and videos are secured and if the receipt is processed well, it will be compensated after a month or two at most. Insurance companies are also in a position to make the compensation quick because they have to deal with the complaints if they don’t; and besides, due to the protests, the money is going to be spent anyway.
Insurance for injuries caused by preventing riots
Usually, basic business insurance does not cover this. Even if the harm is caused by riots, injuries sustained on shopkeepers or employees will not be compensated. Business insurance usually has a clause that compensates for injuries to customers, but there is no insurance against employees, so if you don’t have employee injury insurance, you have to take responsibility for this on your own.
Special insurance policy for riots?
It is preferable to raise the overall coverage limit of business insurance rather than insurance products that take into account more riotous cases. This is because riot-related matters such as disasters, fires, looting, theft, and robbery, which have become the talk of the town, are already included in business insurance as a basis, so it’s a loss get riot-related insurance separately. Raising the coverage limit of business insurance naturally increases the compensation for riot damage and increases the compensation for other emergencies, which can have a killing two birds with one stone effect.
Recommended minimum coverage by store size
Mr. Sunwoo insisted that all expenses that go back to one second before being harmed should considered as minimum coverage. He said, “Because the owners themselves know better about the value of their stores and the safe amount to listen to, it is hard for even experts to say a certain amount.” He just explained how to set a safe amount for the store.
“You have to get the amount that meets the purpose of the insurance,” he said. “The insurance covers all expenses that go back to a second before the damage. Assuming that $500,000 worth of goods have been robbed, it is important to keep in mind that if the insurance covers cost $500,000, the cost of re-opening the store is up to you. It is important to carefully consider the various costs that will arise when affected and to determine the appropriate amount of coverage on your own.”
*The insurance information covered in this article is subject to basic insurance regulations and is universally applicable for businesses insured, but more specific parts of each business need to be consulted with an insurance expert.
