Can you predict a riot?
Summer 2024 was tainted by widespread disorder across the UK, in the wake of the Southport attack.
On 30 July, the country witnessed violence against people, property and police, as violent disorder and civil unrest sprung up on a multi-location basis.
Businesses of all types became direct or indirect victims. Some business owners experienced physical property damage, or threats to themselves and their employees. Others suffered business disruption, having to vacate offices or retail premises on police advice, or taking a decision not to risk employees travelling to work.
Reputational damage has also affected businesses who employed those swiftly brought to justice for their actions on the streets, or online inciting of violence.
For towns like Southport, business recovery is essential, particularly for those that had to close due to a police cordon. Empty amusement parks, cafés and seaside shops have also been witnessed, and this is what an insurance policy would deem ‘loss of attraction’ (lessening of footfall to a business), following the riots.
The random nature of the protests, often in places where civil unrest is not usually witnessed, highlighted the changing pattern of such events, as almost any business can be caught up in civil unrest and suffer consequential losses.
It all highlights the value of insurance. Physical damage to homes and businesses is covered as standard on a property insurance policy, in most cases[1], however some do contain riot or civil unrest exclusions. Non-physical losses need to be covered by a business interruption policy and the eligibility of a claim scenario would be dependent upon the policy wording.
Claims relating to denial of access to a property, for instance, can typically only be made if such an add-on cover has been purchased.
If no insurance cover exists, a claim can be made under the Riot Compensation Act 2016[2], within 43 days[3] from the day on which the riot ends. This purely relates to property damage.
Whilst having comprehensive property insurance and business interruption cover is the best business continuity strategy, there is more to consider. The UK’s terrorism threat is ever-present, complex and evolving. The introduction to Parliament of Martyn’s Law, making it a requirement for many public venues to increase their terrorism planning and response mechanisms,[4] highlights that a terror-related attack can occur almost anywhere, not just in city centres or at transport hubs.
Whilst nobody involved in July’s riots has so far been charged with terrorism, the former head of counter-terrorism believes many actions verged on it.[5] However, no one organisation owned or organised the riots, so claims will be paid on a riot and civil unrest basis. Should actions have been regarded as acts of terror, remembering that some Neo-Nazi groups are classed as terrorists, an impacted business would have probably needed to have terrorism insurance, or non-damage terrorism cover included in their policy, to make a successful claim.
This cover can protect those with one property or business, or a portfolio of properties in different locations. Some property owners will find their mortgage lender insisting on terrorism cover, whilst others may voluntarily buy it for its business interruption, denial of access, or loss of attraction benefits.
Discuss all business continuity and recovery options with a broker, and you should have a clear view of your cover choices. After all, you cannot predict a riot.
Sources:
[1] https://www.abi.org.uk/products-and-issues/topics-and-issues/civil-unrest-insurance-faqs-2024/
[2] https://www.gov.uk/government/publications/riot-compensation-guidance-leaflet/riot-compensation-claims-quick-guide-for-claimants
[3] https://northumbria-pcc.gov.uk/v3/wp-content/uploads/2024/08/Riot_Compensation__Public_Facing__Guidance_-_Final.pdf (page 5)
[4] https://homeofficemedia.blog.gov.uk/2024/09/13/martyns-law-factsheet/
[5] https://www.bbc.co.uk/news/articles/c74lwnxxxzjo