With civil commotion taking place a number of our communities, many questions around business impacts and potential coverage have surfaced.
The purpose of this communication is to give a high level overview of an emerging exposure for business owners in these communities – damage resulting from civil commotion in the form of vandalism and/or theft. If your business is damaged, the insurance carrier will need to review the facts of your loss to determine if any coverage will apply. PayneWest will also be able to assist you with submission of your claim and facilitate carrier communication if necessary.
In general, if your property is covered by a commercial property policy, you should be covered for vandalism and theft losses. It is also important to carry adequate limits of coverage on your property. An exception is if your building is considered vacant according to the terms of your insurance policy. During COVID-19 times many carriers have taken the position that buildings are not considered vacant if they have been shuttered due to government orders. Many states’ departments of insurance have communicated the same position.
Most commercial property policies provide coverage for the perils of vandalism, theft and riot/civil commotion. In order for you to have coverage, your building needs to be listed on your policy. Some policies include limitations or requirements on glass coverage, so you will want to discuss this exposure with your PayneWest agent.
Business Personal Property Coverage
Business personal property or “contents” coverage covers items such as your furniture, office equipment and in most cases your stock. If you have business personal property coverage at the location sustaining damage, in most cases the perils of vandalism, theft and riot/civil commotion would be covered.
Business Interruption Coverage
If your business has sustained damages and must shut down to effect repairs and you have purchased business interruption coverage for the impacted location you should be covered. A few items to note:
- The shutdown of your business must be from direct physical damage to your building.
- There may be a waiting period, which serves as a deductible on this coverage. A 72-hour waiting period is very common.
Extra Expense Coverage
This coverage goes hand in hand with your business interruption coverage. The intent of this coverage is to provide coverage for extra expenses you incur in order to minimize the shutdown of your business. Examples would include renting an alternate location to continue your operations, or the hiring of additional staff in order to get back up and running more quickly.
A common question in this area has to do with expenses incurred to board up windows and doors in order to prevent a loss from occurring. This type of expense is typically not covered by insurance, as it is a preventative measure. Insurance policies respond to actual losses, or expenses incurred to prevent further losses once one has occurred.
Damage to your autos from vandalism is typically covered if the damaged auto is on your policy and you carry “other than collision” or “comprehensive” coverage.
All coverage depends on what is in the policy and how the insurance company interprets its policy.