A retail employee examines the damage from protestors in Manhattan this week.

As businesses report damage from riots, retailers should review insurance policies

HFA members should use the recent rioting and looting across the country to take a second look at their property insurance coverage, says a consultant for Solution Partner Arthur J Gallagher.

Nik Levin says retailers sometimes underestimate the value on their property — either unknowingly or to save money on their premiums. “That’s not a wise move to make, and we’re seeing that play out this week,” says Levin.

Levin says many small retail franchise businesses he’s working with — none of them furniture retailers — are realizing their stores that were damaged during rioting and looting were undervalued. He offers retailers three steps to take during this time.

Get accurate property coverage

“You should be on the phone now with your (insurance) agent making sure your store is covered for what it’s really worth,” says Levin. “That includes the building, the fixtures — everything.”

Get accurate content coverage

“It’s not just your property, but everything inside,” says Levin. “When’s the last time you factored how much inventory you have?”

File a timely claim

“If a retailer suffers property loss, they need to record things immediately,” says Levin. “That means in writing and in pictures. I would even email it to myself so I have a time stamp. That doesn’t mean you can’t come back with future losses, but it’s good for the (adjuster) to have this info early.”

Levin also says he’s heard from small businesses who are worried they might not be covered by rioting or looting. While every policy is unique, he says most standard commercial property insurance policies cover riots and civil commotions. That coverage typically includes not only physical property damage but also income losses when businesses can’t operate as a result — including when access to the business is restricted by civil authorities because of damage to neighboring properties.

[Howard Lorton Furniture & Design withstands turmoil]

“Don’t try to hide how the damage was done,” says Levin. “Adjusters are watching the news just like the rest of us. If you try to make it sound like something it’s not, that’s just noise to the adjuster about what really happened. “If someone threw a brick through your window during a riot, it’s no different than someone throwing a brick through your window three months ago. Be honest and straightforward.”

Document everything in a timely manner

After facing criticism for denying income loss claims from businesses forced to close because of COVID-19, insurers are unlikely to fight claims related to the widespread unrest in response to the death in Minneapolis of George Floyd. The key, says Levin, is to document everything in a timely manner.

Recent vandalism, looting and arson in cities across the United States may rival the 1992 Los Angeles riots to become the most costly civil disorder in United States history, according to the Insurance Information Institute.

The civil disturbance in Los Angeles after the videotaped police beating of Rodney King in 1992 caused $775 million in damages — or $1.42 billion in today’s dollars, according to the Institute. Those riots, however, were largely confined to one metropolitan area. Destruction and looting that erupted after Floyd’s death has been reported in dozens of cities and spread into many suburbs, too.

That destruction should be a wake-up call for retailers. Levin says it’s common for many small businesses to realize they are carrying inadequate coverage after a hurricane, tornado or other natural disasters. By then, of course, it’s too late if their business has suffered damage. “This is an excellent time to review things and make sure they accurately reflect your current business,” he says.

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