1 February 2016
Riots cause damage to property and have lasting effect
The infamous riots in various parts of the UK in 2011 were horrific and the damage caused to property was well over £200m. In addition there was substantial, loss of trade and fears were raised as to whether such events could become regular occurrences as youth unemployment rises and the economic situation hits living standards.
There was some criticism of insurers being slow to react and it is difficult to know how representative this was. Insurers normally react quickly to large events but this was no doubt complicated by the circumstances which may have caused some delays.
Most businesses have cover against riot and vehicles and plan that are comprehensively insured are covered against damage as well. Also, businesses usually have cover against loss of trade as a result of premises being damaged and some may have cover for this even if there own premises were not affected. Provided the figures insured were adequate, businesses should be well compensated.
Since 1886, Police Authorities have been responsible for loss or damage caused by a riot. A riot is broadly defined as ’12 or more persons who are present together and use or threaten unlawful violence for a common purpose’. This means, although insurers will deal with the claim and pay compensation, they are likely to recover some of the outlay from the local Police Authority. Businesses that were underinsured or with no insurance can claim for any shortfalls themselves.
The police only pay for physical loss and damage and not for loss of trade. They pay for repairs or replacement of stock or equipment damaged or stolen but this may not be as much as insurers may pay. The cost of rebuilding the furniture store totally destroyed in Croydon is likely to cost far more than its old value. Insurers will pick up the cost of the difference as well as the loss of trade until the business is back to its pre riot levels.
It is unlikely insurers will increase the cost of cover but may well be more reluctant to provide cover in areas considered potential riot hotspots in the future. However, the cover will still be part of normal insurance arrangements for business and emphasises the need to ensure cover is arranged in anticipation of the worse happening.