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Monday, 27 July 2020 22:05

Applying Insurance Coverage to Vandalism, Fires and Theft

Written by Joann M. Lytle and Jennifer Black Strutt, PropertyCasualty360
Policyholders must review their specific insurance policies to analyze the policies’ scope of coverage, exclusions and terms with regard to damage caused by rioters. Policyholders must review their specific insurance policies to analyze the policies’ scope of coverage, exclusions and terms with regard to damage caused by rioters. Daniel Tadevosyan/Shutterstock

Index

During the days and weeks following the death of George Floyd at the hands of Minneapolis police officers, protests erupted in every state across the country.

Although most of these protests remained peaceful, there were instances of criminal misconduct and property destruction, such as the breaking of storefront windows and doors, theft and even setting structures ablaze.

 

For those businesses that suffered losses, we have a bit of good news; insurance may help.

 

A policyholder must review its specific insurance policies to analyze the policies’ scope of coverage, exclusions and terms.

 

That said, broadly speaking, a commercial property policy covers damage to property and its contents when caused by fire, riots or civil commotion or vandalism. It also covers expediting costs, debris removal and business interruption, including from riots, malicious mischief, vandalism and civil commotion. Crime policies generally cover loss resulting from theft and resulting physical damage.

 

Covering buildings and property

 

For example, a property policy’s “building and personal property coverage” form (ISO Form CP 00 10) provides: “[Insurer] will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.”

 

“Covered Property” typically includes the building, business personal property (including furniture and fixtures, machinery and equipment and “stock”) and personal property of others in the insured’s care, custody or control and located in the building or within 100 feet of the premises. The policy also sets forth specific types of “property” that are not covered---for example, currency.

 

The ISO commercial property policy includes one of three different “covered cause of loss” forms. The first two forms---the basic cause of loss form, and the broad cause of loss form---are generally known as “named perils” forms. These forms specifically list the covered causes of loss. Both forms specifically cover fire, riot or civil commotion and vandalism.

 

Looting and vandalism coverage

 

Riot or civil commotion includes “looting occurring at the time and place of a riot or civil commotion.” These forms do not define “looting.”

 

While the origins of the word are currently under scrutiny for purposes of insurance coverage, the common understanding of the word looting (i.e., the act of robbery or theft) should apply.

 

The Property Claim Services,an insurance industry company that monitors catastrophes, has reportedly designated the recent protests in Minneapolis and other cities as “riot and civil disorder events.” This fact should aid policyholders in making claims for coverage for merchandise stolen during the recent riots.

 

“Vandalism” is defined as the willful and malicious damage to or destruction of the described property. Specifically, vandalism covers damage to a building caused by the entry or exit of burglars, but there may be an exclusion for loss or damage caused by or resulting from theft. In that way, coverage for “vandalism” differs from coverage for “riot or civil commotion.”


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