By Ade Fashola
Like I predicted in my last two articles, The #ENDSARS protest turned violent throughout the country through the infiltration of miscreants. Burning of police stations and illegal prison break. Violence became the order of the day. Well-reported incidents of rioting nationwide have resulted in extensive damage to business premises, inventory and other property. I went around Lagos and saw unparallel damages. In addition, government-instituted curfews or shutdown orders have interrupted businesses, causing commercial enterprises to lose more income. Banks atm machines were damaged. Walls around most of the atm machines were broken for access to the cash contents. It was made possible because the disappearance of police in the street of Lagos.
Standard commercial policies typically include coverages for physical loss or damage to the insured premises and other business property resulting from looting, vandalism, and riots. Whether a specific loss will be covered depends on the actual language in the applicable policy and any coverage exclusion that may apply. It is important to check your specific insurance policy for the following coverages:
Vandalism, Malicious Mischief — Vandalism is generally defined as willful and malicious damage to, or destruction of the policy-holder ‘s property; malicious mischief is similar to vandalism and generally defined as the willful destruction of property for vicious or mischievous purposes.
Riot and Civil Commotion — Both a riot and a civil commotion involve a revolt by a gathering of people in a public place. A civil commotion is similar to a riot, but involves a greater number of people. Riot and civil commotion can be difficult to differentiate. The perils are often listed together in a policy.
Business Income Coverage — This coverage is for the loss of income sustained due to the necessary suspension of business operations during a period of restoration. The suspension of business operations typically must be caused by direct physical loss or damage to the policyholder’s premises resulting from a covered peril.
Civil Authority Coverage — Business income insurance typically includes civil authority coverage, which provides loss of income due to prohibited access to the business premises by civil authority such as a governmental entity. Civil authority insurance covers income lost during a limited period of time. Businesses that are forced to limit hours or suspend operations due to rioting, vandalism, or civil commotion and have coverage for this particular loss of income may be covered after an initial waiting period.
The insurance culture did not help the matter as most businesses assume their insurance policies exclude riot-caused damage despite that the last two editions of National Pilot discussed this peculiar situation. Typically, this is not the case. Insurance coverage for property damage and lost income due to riots or civil commotion should be available under most commercial property insurance and business owner insurance policies. Absent special exclusions, these forms of property insurance provide coverage for a variety of losses, including destruction to store fronts and interiors, broken windows, stolen property, graffiti damage and, in most cases, the cost of debris removal.
In addition to property damage coverage, businesses forced to close as a result of riot damage may have coverage for business interruption. Lost income because of the closure of a property that accepts products or services of the policy holder , or that attracts customers to the policyholder’s business, may also be covered under dependent properties or contingent business extensions of coverage. Likewise, lost income as a result of curfews should be available under the civil authority extension of coverage. While insurance companies so far have resisted paying for losses resulting from the coronavirus, business interruption caused by physical damage to property during riots is in a more conventional, and thus clearer, category of coverage.
Typical commercial policies contain coverage limitations, however. Many require a “waiting period” of 72 hours before a policyholder can begin claiming the benefits of coverage. The first three days of business shutdown, constraint of access by barricade, or limited operation because of other civil authority, such as curfews that shorten business use or hours, usually are excluded from coverage. I discussed this civil authority provision in the last two articles in National Pilot. Policies also might limit interruption coverage to short durations of, for example, three consecutive weeks of loss.
Insurers might assert several exclusions. They would, of course, impose any policy limitations on riot or civil commotion. Additionally, some might try to assert a terrorism exclusion. Moreover, for damaged buildings empty for more than 60 days, insurers might raise vacancy exclusions — most notably, an exclusion for vandalism. Finally, insurers might assert overlapping virus exclusions as a bar to full loss-of-use restrictions from rioting.
In view of the aforementioned, going forward and immediately now because the #ENDSARS struggle is not yet over in addition to political instability in the country, the policyholders considering coverage should take the following steps so that if your policy is not presently adequate, you must adjust it accordingly.
Firstly, review the policy. Analyze your present coverage and applicable exclusions. An experienced insurance broker can help harmonize competing coverages, claims and exclusions, especially the complicated area of business interruption and possible losses outcome.
Secondly, track all damages , expenses and lost income. Insurers will require detailed proof of loss early in a business interruption or property damage claim. Policyholders should consider setting up a separate accounting code to document insured losses.
Finally, mitigate damage. Policyholders should take reasonable steps to reduce damages including installing new doors and windows. Damages enhanced by inattention at the site can be limited. To prevent vandalism on your property, install security lights, install unbreakable glass with burglary bar and light fixtures, install a high fence. Strategically placed shrubs and bushes, lock security gates and doors. Clean up and repair the effects of vandalism immediately. Report vandalism to the police. If vandalism does occur, immediately call the police to report the incident. Gather evidence on who the perpetrators might be (if known). Then, you can call your insurer, who will gladly help you start a claim to fix the damage.
