Riot and Civil Commotion
IT’S A NEW WORLD EVERY DAY!
Recently one of my dealers opened our conversation with ‘I feel as if I get up in a new world every day!’ I identified immediately with that thought because lately I have spent a lot of time studying insurance forms and answering calls regarding virus coverage and now riot and civil commotion. These are not areas of the insuring contracts that have been front and center during my first thirty years of working with car dealers! Sometimes, as the world changes, I find myself running to catch up. In an earlier blog, we talked about Covid19; today, let’s talk about riot and civil commotion.
“WHEN THE ROCKS ARE FLYING,
AM I COVERED?”
The dealer’s inventory is the most exposed to loss and the only way to provide that coverage is via the purchase of dealers’ open lot physical damage coverage. Under the two commonly used garage policy forms – the Garage Coverage Form and the Auto Dealers Coverage Form – this protection is available at several levels including:
- Fire, theft and collision only
- Specified Perils and Collision
- Comprehensive and Collision
Fire, theft and collision respond only to loss from those three perils. Specified perils include mischief and vandalism which is where loss due to riot or civil commotion would be adjudicated. The comprehensive peril shelters the vehicles from loss from any cause other than collision or the vehicle’s overturn. It is the broadest of all available physical damage protection. Once you determine at what level your physical damage protection is provided, then you need to check for endorsements that amend the coverage in any way. Typically, those endorsements would address specifically excluded perils, such as wind or hail or flood and/or may designate deductible differences for certain causes of loss. If vandalism is excluded, then it is reasonable to assume there is no coverage for riot or civil commotion.
What about physical damage coverage?
Another source of insurance for inventory physical damage is via various Lloyd’s of London contracts; indeed, Lloyd’s contracts have become the vehicle of choice for many, if not most, Texas Independent Auto Dealers. They lend themselves to more individually designed insurance programs to fit unique dealer operations. For instance, coverage may be applicable only to vehicles on which there is a lienholder interest or, perhaps, only to vehicles valued at a dealer-selected amount, or any number of out-of-the-ordinary dealer requests. The Lloyd’s policies with which I am familiar all include a supplemental coverage option; the Supplemental Coverage definition includes riot or civil commotion as a specifically named covered peril. Again, you must review your policy to be certain that Supplemental Coverage is included and has not been adversely amended via any contract endorsements. It would be extremely rare to have riot and civil commotion as a designated excluded peril.
Nutshell: If your insurance program includes inventory physical damage coverage, check the listed covered perils and then review all endorsements related to those perils.
What about your buildings and their contents? Standard property contracts come in three varieties:
- Basic Causes of Loss
- Broad Form Causes of Loss
- Special Causes of loss
Basic Causes of Loss provides the most restrictive list of covered perils and it includes riot and civil commotion as a named peril. Broad Form follows suit with a couple of additional listed perils and Special Cause Forms provide the most comprehensive protection available. Again, there can be endorsements and/or amendments to the contract limiting or excluding losses due to certain exposures and, again, it would be unusual to see a riot and civil commotion indicated as excluded.
Lloyd’s property policy forms offer a larger challenge in that there are multiple forms that can vary greatly from syndicate to syndicate. Although my experience indicates riot and civil commotion is generally a covered peril under Lloyd’s contracts, I encourage review of each policy, with a careful eye toward the named perils, endorsements and exclusions.
Nutshell: If your insurance program includes property coverage, it is likely that loss to the property listed in the policy due to riot or civil commotion will trigger insurance response. Endorsements must be closely reviewed.
As I always remind my clients, I hold no licenses as a claims adjuster and have no legal authority. My opinions and views are based solely on my experience. Insurance does not include a ‘one size fits all’ variety and I encourage you to discuss with your agent the questions you have as they relate to your insurance concerns and program.
Our business is providing insurance protection for your business! As always, I appreciate the opportunity of discussing insurance coverages with you. Please call or e-mail me your insurance questions and concerns. firstname.lastname@example.org
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MULLEN INSURANCE AGENCY, IN
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