After witnessing in horror the riots, civil disturbances that broke out like wildfire in many British cities in 2011, businessmen and women now wonder if their property and premises are covered under their existing business insurance policies.
Many shopkeepers and traders in the UK who were displaced by the riots of last year have not received compensation from their insurance companies.
There have been recent changes in UK riot laws, which were introduced following the widespread riots against The Thatcher Government in early Nineteen Eighties. It appears that there is some confusion between the authorities as well as the insurance companies regarding how to interpret the law and, consequently, who ultimately has to pay for the loss.
The problem lies in defining the point at which a civil disturbance is considered a riot. Depending on the nature of the disturbance, the police authority or insurance companies could be liable. This has sometimes caused distress to business owners, particularly shop owners, who suffered property damage during the riots. These owners are still waiting for compensation. English riots saw shops as the most targeted, with large amounts of stolen high-value goods. Arson also caused billions in fire damage to contents and buildings.
Insurance coverage for riot and civil commotion is an optional peril and is included in most commercial property insurance packages. This includes shop insurance, pub insurance and restaurant insurance. You can also choose to include it as an optional peril, or as a standard part of all UK commercial combined insurance policies.
Riot and the Law
Acts of riot can now be defined in English law by the Public Order Act of 1986, which became effective in 1987. It continues until today.
A riot must exist in order to occur.
Each person who uses or threatens to use unlawful violence to achieve a common goal is guilty of riot if there are twelve or more of them.
It is not necessary for a person of reasonable fitness to be present on the scene. However, it is irrelevant if one of the groups is using violence or that conduct can be inferred.
Riot is subject to a maximum sentence up to ten years imprisonment at Her Majesty’s discretion or a fine.
The Riot Damages Act was also created to make riots more affordable for local police. This law effectively signifies that riot is now a serious risk. It sends a signal to the police that if there is an extreme infraction of law and order, they will have to pay.
Get Insurance and Riots
Nearly all commercial property insurance policies for shopkeepers and small business owners will include provisions for material damage or loss due to civil commotion. This includes all shop insurance policies.
The property owner must file a claim with their insurance company within seven days if a riot takes place and the shop sustains damage. In order to file a claim with the police, insurance companies must also appoint assessors within seven working days.
Problems arise when there are large losses that are spread across large areas of the country, and claims are not reported on time or aren’t handled quickly. Police stations do not have enough staff to deal with the flood claims. Large shops and warehouses may be worth ten million pounds each.
In certain instances, insurance companies may not pay out because they are afraid they will not be able to pass the loss on to the police. The shop owner then has to negotiate with the police authority to recover the lost costs.
Some business property may not be covered by riot insurance. Motors and vans used by business need to be insured under a separate policy.
Riot Damages Act does not cover business interruption and loss of profits. It is worth asking the insurer to help you recover any lost profits if a shop has been set on fire and there have been losses in trading.
All business owners should verify the current business interruption section of their policies and, if in doubt, contact their broker to confirm current levels.
