Shop Insurance And Reading The Riot Act To Your Business Insurance Company

Having watched in horror at the riots and civil disturbances that spread like wildfire out of control across many British cities in 2011, many business men and women are left wondering if their premises and business property is covered under their existing business insurance policies.

In the UK many shopkeepers and tradespeople who lost their businesses and property in last years riots, have yet to be compensated from their insurers.

Due to fairly recent changes in UK riot law, introduced after the nationwide riots against the Thatcher Government in the early Nineteen Eighties, there appears to be some confusion amongst the authorities and the insurance companies as to how to interpret the law and consequently, who is ultimately responsible to pay for the loss.

The problem is one of defining when a civil disturbance becomes a riot and vice versa. Depending upon the status of the disturbance, it could be the insurance companies who are liable or the local police authority. This has in some cases caused distress to business people, in particular shop owners who lost property in the riots and are still awaiting compensation for their claims. Shops were the main target of the recent English riots, with extensive theft of high value goods. Arson also caused billions of pounds worth of fire damage to buildings and contents.

Riot and civil commotion insurance cover is a special peril that is included as standard in most commercial insurance business property packages such as shop insurance, pub insurance, restaurant insurance, hotel insurance and office insurance. it is also available as an optional peril choice or given as standard in all UK commercial combined insurance policies that could cover any high street risk.

Riot and the Law

An act of riot is now defined under English law in the Public Order Act of 1986 which became effective in 1987 and lasts until today.

For a riot to exist there has to be:

Where twelve or more persons gathered together who use or threaten to use unlawful violence for a common purpose and that the conduct of this group is such that would cause a person of reasonable firmness present at the scene to fear for his safety, each of the persons using unlawful violence is guilty of riot.

The law states that no person of reasonable fitness needs to be present at the scene, it is immaterial if only one of the group is using violence and that conduct can be inferred.

Riot carries a maximum sentence of ten years detention at Her Majesty’s pleasure or a fine or both.

The Act also made it the cost of a riot the responsibility of the local police forces with the introduction of the Riot Damages Act. This law effectively means that riot is now a fundamental risk and sends a message to the police that if law and order in your area gets out of control, you will foot the bill.

Shop Insurance and Riots

Nearly all commercial property and business insurance policies designed for the retail trade and shopkeepers will contain provisions under the special perils section for material damage and loss, due to riot or civil commotion. This includes all shop insurance packages.

If a riot occurs and a shop suffers material damage, it is the responsibility of the property owner to file a claim with the insurance company within seven days for the loss. Insurance companies then have to file the claim with the local police authority involved and appoint assessors within a further seven days.

Problems arrive when losses are substantial and spread over large areas of the country and claims are reported or handled late. There are physically not enough staff at police stations to handle the flood of claims, which in the case of large shops and warehouses can be in the region of ten million pounds or more per claim.

Insurance companies are often reluctant to pay out in certain cases where they fear that they cannot pass the loss onto the police, and the onus to recover the costs of the losses then falls directly to the shop owner negotiating with the police authority.

Not all business property is covered by riot insurance. Business vans and motors need to be covered under a separate policy with a separate claims process.

Loss of Profits and Business interruption are not covered by riot under the Riot Damages Act and are not recoverable from the police. If a shop has been burnt down and trading losses occur it is worthwhile badgering the insurance company involved to try to recover some of the loss of profits, which may be covered.

All business people should check the existing business interruption section of their policy wordings and if in doubt contact their broker or insurance company to confirm current levels of riot cover.

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