Does Your Company Have Political Violence Insurance?
Standard commercial property insurance policies, including business owners policies, have traditionally covered damage to physical property from riots, civil commotion and vandalism. Both named-perils and all-risks policies typically include these causes of loss. Buildings and their contents are protected.
Recently, however, some major insurers in the United States have cut back. They’ve stopped providing coverage in commercial property policies for strikes, riots and civil commotion in areas hard hit by violent protests. In 2020, losses from politically motivated destruction and looting exceeded $2 billion.
Three categories of independent policies
Outside of their regular commercial property coverage, businesses and other organizations could need to obtain financial protection against such loss. This is especially true in metropolitan regions, however it also applies to impacted suburban communities. You can be presented with three distinct kinds of stand-alone insurance plans to address any gaps in your coverage if these exclusions have affected it. Although each insurer covers different risks, the following provides a broad overview of the products and the safeguards they are meant to provide.
- Of the political violence products, terrorism insurance is arguably the most well-known. Following the 9/11 terrorist attacks, when insurers eliminated comprehensive terrorism coverage from business insurance plans, it was created as stand-alone protection. Although many violent crimes are referred to be terrorist attacks informally, the U.S. government has not designated any of these incidents as “terrorism.” For many years, in order for coverage to begin, government certification was necessary. However, further laws are also being drafted to address terrorist activities that have not been approved by the US government.
Chemical, biological, radiological, and nuclear assaults may even be covered by these customizable insurance. In addition to offering customisable limits and deductibles, insurers are now increasingly providing crisis management services and specialized claims teams to address terrorist incidents.
- A relatively new product that attempts to address various acts that might result in property destruction is political violence insurance. Political violence insurance often covers damage from civil wars, insurrections, revolutions, coups, mutinies, riots, strikes, civil unrest, and intentional damage, however various insurers mix coverages in different ways.
Terrorism is also covered in several insurance. Furthermore, it is frequently possible to include by extension any identified dangers that aren’t already covered by your insurance on political violence. Protection against business interruption (income loss) is also occasionally offered or optional. Political violence coverage for foreign company locations is also provided by certain insurers.
Political violence policies are restricted by significant contract restrictions. You have to comprehend each one completely. For instance, it is typical to discover a language that excludes coverage for any damage that would be covered by another policy the policyholder owns but for the political violence policy. Additionally, it frequently does not cover physical or psychological harm to individuals.
If you know a riot is likely or impending, your organization will probably be obligated to take reasonable steps to prevent or lessen losses, such as boarding up windows and doors or relocating merchandise.
The most comprehensive kind of coverage in this family is political risk insurance, which is primarily meant for businesses with interests abroad. Usually, it involves contract frustration, political violence, abrupt currency inconvertibility or nontransferability, and the seizure or nationalization of your assets or property. Some might even encompass war and terrorism. Businesses that only conduct business in the US may find political violence insurance more suitable because they are often less vulnerable to the monetary damages covered by political risk plans.