Insurance policy exclusions have proved problematic for Baltimore small businesses looking for financial help in recovery from the unrest that affected much of the city last month.
According to a recent Bloomberg and Thumbtack.com report, Baltimore small business owners are concerned about poor sales, access to credit and competition from overseas from big business. In fact, hiring was already down before the riots began.
Two weeks after the riots, 250 small businesses were unable to open their doors and consequently, lost out on potential income. While business interruption insurance covers lost income during the week-long curfew that affected the area, as many as 75% of small businesses are underinsured and nearly half lack a business continuity plan. Others lack endorsements necessary to cover things like replacing glass windows.
Even those small businesses that were insured have been having difficulty receiving insurance payment, as many business policies carry exclusions for damages caused by “rebellion or uprising.”
“I think it will be interesting to see, particularly given the political considerations, if insurance companies start denying claims based on those exclusions,” Alex Brown, a partner at Shapiro Sher, told the Baltimore Sun
. “Whether the riot falls under the exclusion will depend on the language.”
And though Maryland Insurance Commissioner Al Redmer, Jr. has attempted to make the post-riot claims process as simple as possible – even urging carriers to forego typical police report requirements – these businesses face an uphill battle.
Redmer says that insurance premiums for business policies, which are already expensive for cash-strapped businesses, are likely to rise as a result of the riot damage.
The situation serves as a good reminder to independent insurance agents working with small businesses to read through policies thoroughly and note exclusions that could become problematic in the event of rioting.
According to the Small Business Administration, 284 businesses were affected during the riots and damage is estimated at $9 million. There are no current plans or programs in place to help the businesses owners, though online crowd-funding through sites like GoFundMe have helped raise money to assist the Baltimore business community.