Insurance Coverage, Damage, and Business Losses from Riots and Vandalism
Businesses across Wisconsin are wondering if they are insured against damage caused by riots, vandalism, and curfews. Insurance policies commonly provide coverage against riots, vandalism, and civil commotion, including business interruption coverage. This coverage is not guaranteed, however, and every person and business concerned about the issue should review his or her insurance policies carefully. This review should include the intricacies of when and how the coverage might be limited based on the nature, source, and duration of the loss. A sampling of these critical issues is discussed below.
As a preliminary matter, Wisconsin law formerly provided that counties and cities were strictly liable for injury to person or property caused by a mob or riot within their respective jurisdictions, subject to contributory negligence principles. An insurer who paid for riot or mob damage had no subrogation claim under this law against a county or city. This law was repealed in 2009.
Insurance policies will usually specify that coverage is provided for damage from “riot,” “civil commotion,” or “vandalism.” Alternatively, there may be a provision that excludes these events from coverage. For insurance purposes, a “riot” is “a tumultuous disturbance of the peace by three persons or more assembling together, of their own authority, with an intent actually to assist each other against any who shall oppose them in the execution of some enterprise of a private nature, and afterwards actually executing the same in a violent and turbulent manner, to the terror of the people.” 10A Couch on Ins. § 152:16. “Civil commotion,” by comparison, has been interpreted to mean a broader, more prolonged disturbance than a riot, though some jurisdictions have found “riot” and “civil commotion” to be legally synonymous. 10A Couch on Ins. § 152:14. “Vandalism” is generally defined as the willful and malicious destruction of property. 11 Couch on Ins. § 155:92
Whether property damage falls under “riot,” “civil commotion,” or “vandalism,” coverage depends on whether the key elements of the events are present. For example, where a group of people trespassed and damaged a building, the incident was not a “riot” because there was no evidence of public terror or cooperation to resist lawful authority. Blackledge v. Omega Ins. Co., 740 So. 2d 295, 299 (Miss. 1999). Additionally, vandalism, arson, and other destructive acts are not a “riot” when committed in secret with the goal of avoiding observation. Int’l Wire Works v. Hanover Fire Ins. Co., 230 Wis. 72, 283 N.W. 292 (1939). Finally, proximity to a riot does not guarantee coverage if there is no evidence that the property damage is the result of the riot. Kent Ins. Co. v. Glades Liquors, Inc., 418 So. 2d 1101, 1103 (Fla. 3d DCA 1982).
Business will also suffer lost revenue from a curfew imposed by civil authority in response to a riot. Again, whether there is coverage for these losses turns on the language of the specific policy at issue. Generally, business interruption policies require that the interruption result from physical damage to covered property. Such policies may cover a loss arising from a government closure order so long as that order is predicated upon damage to or destruction of business property. This is the same policy language that prevents businesses from collecting business interruption coverage for government ordered closures due to the coronavirus pandemic. Where the policy does not require physical damage, insureds have recovered for business interruptions caused by a curfew imposed due to riots.
Looking forward, recent events will lead to an influx of claims for insurers. In all likelihood, most of these claims will be paid immediately. However, there will be cases where the facts, policy language, and law do not lead to a definitive conclusion. If your or your business need help pursuing a claim or would like an opinion on the breadth of your coverage, Axley is here for you.
