Is Looting Insured?

An insurance expert on how damaged businesses can recover.

People wearing masks and gloves sweep debris into a garbage bag and survey the damage
Volunteers clean up in front of a burned and looted store in Long Beach, California, on Monday. Apu Gomes/Getty Images

Over the past week, protests against police brutality have been held in dozens of cities across the U.S. While most saw large and peaceful assemblies, some—such as Los Angeles, D.C., New York City, and Minneapolis—included looting, arson, and other property destruction from a small number of participants. For many businesses, this vandalism follows months of reduced income due to the coronavirus shutdown—further increasing concerns about rising premiums. To get a better sense for how businesses are dealing with insurance claims at the moment, I spoke to Janet Ruiz, director of strategic communication for the Insurance Information Institute. Our conversation below has been condensed and lightly edited for clarity.

Slate: What sorts of insurance claims have you been seeing over the past week?

Janet Ruiz: Businesses have been looted and burned and had glass broken. This is a covered loss under most business insurance policies. For small businesses, it’s usually a package, and it will include any improvements they’ve made to their space. If they own the building, then it would include coverage to repair or rebuild the building if it’s a total loss. Most business owners, if they have employees, are also getting help with workers’ compensation if an employee got hurt.

How would you compare this to other major events, like hurricanes?

It’s a little different because it’s happening all over the country. Usually weather-related catastrophes are in a smaller geographic location. But the number of claims from businesses is manageable. Insurance companies are prepared to handle catastrophe claims. That’s why they reserve money to be able to pay claims. They’ll be fully staffed and ready.

What’s covered under most insurance claims?

If you’re a business owner, all the physical damage to the building up to your policy limit would be covered. All your contents up to your policy limit will be covered. That would also include a tenant that’s responsible for their inside improvements. If it’s a restaurant, they have all of the kitchens, the tables. It it’s retail, they bring in a lot of fixtures, etc. There’s other coverages that people may have or may not. They’ll have to check their policy. There’s business-interruption coverage that some businesses add on. It helps companies that incur extra expenses to continue operations while the premises are being repaired. It also helps businesses that are forced to suspend operations or limit their hours of operation, replacing the income they would have generated in a typical time frame.

Does the recent wave of coronavirus-related claims complicate matters?

It doesn’t. It just means they do need to put in a new claim, because this is a different loss. The coronavirus didn’t generate coverage for most businesses because viruses are excluded. Coverage is usually for physical damage to property. There wasn’t physical damage due to coronavirus. [For business-interruption claims] it really depends on how long the business was closed during the coronavirus as to how it would affect the average income. If it was a few weeks, it’s just going to get averaged into whatever time period that a company looks at to project what the income would have been during the time period that they were going to be closed.

If businesses file a claim because of the protests, would premiums rise?

It doesn’t affect [the premiums] in the near future. Generally, catastrophes get looked at more in the long-term average. [The California Department of Insurance] looks at a 20-year history when they look at catastrophe. The rates don’t go up immediately—only if you were having riots every year. I’m usually talking more about wildfires or hurricanes. In California over the last five years, we’ve had some large wildfires. Those five years are going to be averaging into that 20-year history, so you could see rates increase.

The other thing is that rates might not necessarily increase due to the rioting and civil disorder; it could be just due to the higher cost of building in the area. But people always try to attach it to a recent disaster. It’s not something that happens right away, and it really depends on a lot more factors. I don’t think this one event will increase the premiums. I’m not predicting whether they would go up or not, but it wouldn’t be dependent on riots or commotion.

Will extra costs be passed on to consumers and result in higher sticker prices?

I don’t see that as necessarily happening. If premiums go up, they would have to go up quite a bit to make businesses raise their whole cost. They generally don’t transfer that onto their customers. They’re looking at their whole cost to do business, not just their insurance premium.

One of the most common things we’ve seen with businesses during these protests is broken windows. Could you walk me through what a business would have do to get that fixed and covered by insurance?

The important thing is to get it cleaned up and boarded up. They should keep receipts and take pictures of all the damage and get that turned in to their insurance company. Then they have to check their insurance limits. Some have the building owner responsible for glass. Some have the tenant responsible for glass. Most people do include glass as a coverage on their business policy, especially if they have storefronts.

What about if a business is burned down?

If your business is burned down, get photos right away. You’re going to have to start working on your inventory as well—and that’s for any of the folks who had looting. Most importantly, get the claim started, find out what your insurance company is going to ask for. They usually ask you to provide a proof-of-loss statement and a signed, sworn proof of loss containing the information requested to investigate the claim. This is usually done within 60 days after the reporting of the claim.

What you have been hearing from businesses across the country at this moment? What are they most concerned about?

Some are concerned, and I always hear this after any catastrophe, whether it be weather-related or a riot. They are concerned that rates will go up because of the incident. I always have to assure folks that’s not how it works. You buy insurance to get coverage, and that’s going to be more than one incident and the state of the economy in your area, as well as the cost to do business. They are concerned about whether they have coverage or not, because they don’t always know things like the fact that riot and civil commotion are a covered loss.