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January 30, 2013

Does business insurance cover damage from a riot?

By Robert DiGiacomo, InsWeb.com

Your business may be as harmless as a neighborhood dry cleaner or an accounting office in a suburban office park, where riots and other civil unrest are the last things on your mind.

However, if your property turns out to be in the wrong place at the wrong time –– whether it’s drunken sports fans letting off steam by smashing windows or civil protesters losing their cool in a clash with cops –– you may be caught unprepared.

Here are seven tips to make sure you’re able to protect your business under such circumstances.

1. Take proper precautions.

If you know your property will be in the path of something like a riot, you should temporarily close your business, according to Gene Fairbrother, lead small business consultant at the National Association for the Self-Employed.

Treat the situation like there’s an impending storm by blocking exposed windows and doors with plywood so vandals won’t be able to “smash and grab.”Riot insurance

“You don’t want customers coming in and being injured by someone else. Don’t be afraid to close the doors for a couple of days,” Fairbrother says.

2. Stay cool.

If you decide to keep your business open in the midst of a longer-term situation like Occupy New York, with protesters asking to use your restroom or generally causing a nuisance, keep a level head.

“Don’t cause a conflict; don’ make them angry at you,” Fairbrother says. “You have to be diplomatic –– you have to understand how to negotiate.”

3. Keep in mind that liability coverage is sufficient.

For most owners of small and midsize businesses, standard commercial property insurance will cover damage from civil unrest.

But you also need to make sure you have the right insurance for your situation. For example, a retail shop or other storefront business with regular foot traffic will have different coverage needs than a business in an office park that doesn’t have many visitors.

“If you have a bricks-and-mortar location, the landlord will require you to have plate-glass-window insurance,” Fairbrother says. “The landlord doesn’t want to be liable for a $3,000 glass window.”

4. Shield your workers and customers.

Injuries suffered by clients on your property during a riot or other form of civil commotion would fall into a gray area if a client made a claim, according to Weedin.

Liability insurance more than likely would cover such an incident, but the claim payout might depend on whether you were negligent, Weedin says.

For employees, workers’ compensation insurance typically would cover injuries suffered because of civil unrest, but each state has different requirements, Weedin says.

5. Use your umbrella for extra protection.

Anyone whose business is near a city hall, a sports stadium or another magnet for potentially risky activities should consider adding an umbrella liability policy. This provides protection above the maximum liability levels on your property coverage, Weedin says.

If you already have a basic umbrella policy (which usually carries coverage of $1 million) and don’t think it’s sufficient, consider boosting the level of coverage, he says.

6. Read your policy.

Always read the fine print on your liability policy, especially the exclusion for an “act of God,” which typically includes tornadoes, hurricanes, lightning, hail, earthquakes or floods.

Whether such a clause applies to a wartime situation or an area frequently hit by terrorism depends on your policy and your circumstances, Fairbrother says.

“If you were living in Tel Aviv and have U.S. insurance and a rocket comes on your doorstep, guess what – you’re probably not going to be covered,” Fairbrother says.

7. Consider the risks.

For companies that operate in the Middle East, North Africa and Asia or other unsettled regions, specialized coverage is available:

• Strikes, riots and civil commotion.
• Terrorism
• Political violence.

A 2011 report from global insurance broker Willis Group found that getting more specialized coverage may prove difficult, depending on whether unstable conditions escalate in a particular region.

The most comprehensive of these three types of policies is political violence insurance, which protects against financial losses resulting from “insurrection, civil unrest, politically motivated sabotage, strikes, riots and civil commotion, armed uprising, coup d’état and civil war,” according to Willis.


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