The Baltimore riots: How insurance coverage could get complicated

The unrest in Baltimore over Freddie Gray’s death will doubtlessly prompt many insurance claims, but securing payment could be tricky.

The Baltimore riots: How insurance coverage could get complicated

Insurance News


The unrest in Baltimore over the death of Freddie Gray has resulted in some of the worst urban rioting the US has seen in recent years: shops were looted, car windows smashed, police officers injured and local businesses burned to the ground during a night of outrage at what some are describing as widespread police brutality.

The rioting was so great, Maryland Governor Larry Hogan declared a state of emergency and a curfew for the city Monday night – actions that raise questions on just how personal and commercial insurance claims filed in the wake of the disaster will be handled.

The violence in Baltimore erupted following the funeral of Gray, a 25-year-old black man who died in police custody on April 19. Protests over his death were originally peaceful before devolving into looting and arson that left 19 buildings demolished, 20 officers injured and one person in critical condition. While the rioting has largely been quelled, the physical and financial damage is unquestionable.

Luckily for most victims of the violence, insurance experts believe traditional home, auto and business policies will cover the bulk of their losses.

Damage due to “riots or civil commotion” is generally included in comprehensive auto coverage, homeowners policies and standard business property insurance policies, the Insurance Information Institute said yesterday.

Business interruption coverage, however – which covers lost income – is only triggered when the insured business incurs direct physical damage or the government shuts down an area due to property damage caused by a peril covered by the company’s insurance policy that prevents customers or employees gaining access to the premises.

Fortunately, it seems Hogan’s declaration of emergency will satisfy this requirement, says III spokesperson Loretta Worters.

“Now that the governor has declared a state of emergency, businesses that haven’t sustained damage, but have lost profits due to the crisis may file a claim,” said Worters.

However, it is worth nothing that even after a covered event, many BI policies have a waiting period of several days before coverage comes into play.

“Once it is in play, the coverage is not retroactive to the day of the event,” Worters said. “After the waiting period expires, coverage is provided for lost net income, temporary relocations expenses (designed to reduce overall costs), and ongoing expenses such as payroll that enables businesses to continue paying employees rather than laying them off.

“Coverage is available only for as long as it necessary to get the business running again, and usually not longer than 12 months.”

The Baltimore riots are the latest in a public outcry against allegedly brutal police treatment of the black community, sparked by the death of Michael Brown in Ferguson, Missouri.

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