Riots: what to do next?

Businesses and property owners affected by the looting and disturbance in London and major UK cities this week may be able to file insurance claims for damage caused by terrorism as well as for riot damage losses, say solicitors.

Reynolds Porter Chamberlain partner Stuart White warns businesses that most insurers require claims for riot damage to be made within seven days, or the claim may be rejected. This is because the insurer can then make a claim in the policy-holder’s name against the police under the Riots (Damages) Act 1886—but must do so within 14 days of the damage occurring.

Businesses without property insurance may be able to recover their losses directly from the police under 1886 Act.

White warns that any delay introduces “an unnecessary risk”.  However, he adds that compensation under the Act would not usually extend to financial losses while the business is unable to trade—this would normally only be recoverable by businesses with business interruption insurance.

Joanna Bhatia of the LexisPSL property team says businesses could also argue there was a political element—an anarchist or anti-capitalist basis—to the riots and claim for damage caused by terrorism.

Most commercial buildings insurance and business interruption policies provide cover against terrorist risks only up to £100,000 per event, he said, after which cover must be obtained from the Pool Reinsurance Company.

“Damage must be caused by an action certified by the Treasury as an act of terrorism,” she says.

“Insurance companies may have difficulty convincing Pool Re that the recent riots come under their definition of terrorism, despite the fact that some rioters have been reported as confirming that they were looting as a protest against taxes. The Pool Re definition is narrower than other definitions.

“Property owners may, therefore, decide that a safer bet is to claim under other heads in their general policy which will be drawn more widely (for example, under the malicious damage head).”