Coverage for Protests or Civil Unrest: Are These Losses Insurable?

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[T]here should be concern regarding these standard endorsements and exclusions, as they often utilize undefined terms (which could be argued to be vague)...

The recent episodes of protest and civil unrest following polarizing decisions in areas like Ferguson, Missouri and New York City have raised concern over the potential to insure against the losses that may be associated with these activities, including property damage and personal injuries.

Generally,  commercial general liability (CGL) policies can contain a standard endorsement to the policy excluding these types of damages. The most common utilized form is the CG 2231 07/98, which is developed by the Insurance Services Office, Inc. in 1997. In pertinent part the standard exclusion provides as follows:

* * *

This Insurance does not apply to "bodily injury", "property damage" or "personal and advertising injury" arising out of:

1. Riot civil commotion or mob action; or

2. Any act or omission in connection with the prevention or suppression of a riot, civil commotion or mob action.

Insurance Services Office, Inc., Form CG 2231 07/98

As such, this illustrates an attempt to exclude these damages under both Coverage A and B under a standard CGL policy  of insurance. Other policy types and endorsements may also be used, ultimately attempting to avoid the same types of claims. However, some policies may include coverage for such losses. An example of such a case is as follows:

ADDITIONAL COVERAGE – COLLAPSE ENDORSEMENT

* * *

We will pay for direct physical loss or damage to Covered Property caused by collapse of a building or any part of a building under this Coverage Form, if the collapse is caused by 1 or more of the following:

(1) Fire, lightning; explosion; windstorm or hail; smoke, aircraft or vehicles; riot or civil commotion; vandalism; leaking from fire extinguishing equipment; sinkhole collapse; volcanic action; breakage of building glass; falling objects; weight of snow, ice or sleet; water damage; all only as insured against in this Coverage Part;

(Emphasis added.)

* * *

As such, careful review and understanding of your insurance is critical to proper coverage.

However, there should be concern regarding these standard endorsements and exclusions, as they often utilize undefined terms (which could be argued to be vague) and their applicability to damages associated with employee wages and benefits if a business has to close or is damaged and causes interruption in activity. These employer related damages should be addressed by other insurance policy types, in addition to the standard CGL policy and may include coverage for business interruption. Moreover, these business interruption policies may similarly have endorsement intended to exclude these activities and must be carefully scrutinized to ensure proper coverage.

Ultimately, the insurance obtained can be bargained for and even the standard exclusions can be removed ... for a price. As such, consultation prior to insurance procurement is often critical for a knowledgeable insured who is aware of and has accepted risks associated with operation of a business, no matter what size.

*

[A member of Fowler White Burnett's Insurance Group, Stephen Gross focuses his practice on litigation and insurance coverage matters. The majority of his practice involves complex litigation and coverage and defense matters, including but not limited to construction and commercial matters.]

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