Most people saw on the news last weekend, “The Huntington Beach Riots.” The riots started when, late Sunday, July 28, 2013, a fight broke out following the U.S. Open of Surfing Championship. The fight provoked other attendees of the U.S. Open and led to a two-hour confrontation between police and unruly beach goers. My first thought after finding out that no one was seriously hurt was, “What about the Main Street business owners whose property was trashed and otherwise destroyed?”
Hopefully, the business owners were prudent and secured commercial property insurance to protect their assets during the riots. Most commercial property insurance covers direct physical loss to business premises and personal property caused by (1) fire or lightning; (2) explosion; (3) windstorm or hail; and (4) vandalism. Procurement of this insurance is essential to the operation of any successful business enterprise. The insurance does not just cover repair or replacement of construction components damaged by a covered loss. It also covers a businesses’ equipment and merchandise, the personal property of others stored at the business facility, and losses to electronic data caused by the loss.
Commercial property insurance does not cover everything, though. Business owners should work closely with their brokers to make sure they understand what their policies do and don’t cover. For example, deterioration, “wear and tear,” latent defects, and water damage often defeat coverage, even if the covered peril, e.g. the Huntington Beach riot, brought the excluded condition to light. So, if a rowdy surfer throws a stop sign through a business owner’s front window, and the window chatters as opposed to cracks because the window subcontractor failed to install protective safety film, the business owner will likely face a coverage denial from the insurance carrier.
Additionally, many commercial property insurance policies limit or exclude damage to vacant buildings because of the higher risk of vandalism. An example of such policy language is: “If loss or damage occurs to a building that has been vacant for more than 60 consecutive days prior to the occurrence of that loss or damage, we will … not pay for any loss or damage caused by (vandalism, theft, water damages, etc.).”
In summary, our hearts go out to the business owners who were adversely affected by the Huntington Beach riots. There simply was no good reason for this damage to occur. However, on the bright side, thankfully, a product exists to protect business owners in situations which cannot be predicted or otherwise protected against: commercial property insurance.