News reports from across the country tell of retailers boarding up their buildings in attempts to curtail damage from rioters post election. From an insurance perspective, are there any coverage issues these retailers should consider?
Insurance coverage questions asked over the past several days in preparation for the election have center around several common terms:
• Riot,
• Civil unrest,
• Insurrection, and even
• War.
Each read similarly, “If my insured’s property is damaged by (fill in the blank from above), is there coverage? Understand that no (or very few) coverage question(s) is/are answered with a simple “yes” or “no.” There is always a “however.”
But where possible, the “however” is avoided in this short article. Simply put, yes, there is coverage in the Insurance Services Office (ISO) Causes of Loss – Special Form (CP 10 30) for any loss caused by disgruntled groups following the election – regardless which of the above terms is used.
Following is an individual yet very quick review of each potential “cause” presented previously. This review explains why coverage does exist.
Riot
Notice that riot is not excluded in the CP 10 30. In the Special Form, a loss is covered unless it’s specifically excluded. As further proof, the Broad Named Peril form (CP 10 20) specifically COVERS damage caused by riot; it’s illogical to think that a named peril form would provide more coverage than an open peril form. Thus, damage caused by riot is covered in the unendorsed CP 10 30.
Civil Unrest
This term is not found in any ISO cause of loss form, as covered or excluded. Since it’s not excluded, any damage arising out of “civil unrest” must be covered. But what is “civil unrest”? Essentially, it can be classed with riot. The broad named peril policy uses the term civil commotion – which is specifically covered. Again, damage caused by civil unrest (civil commotion) is covered by the unendorsed CP 10 30.
War and Insurrection
These exclusions raise a few eyebrows because both causes are specifically excluded within the Special Form (CP 10 30):
f. War And Military Action
(1) War, including undeclared or civil war;
(2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or
(3) Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.
Can the actions of malcontents be considered war? It is unlikely that such actions meet the intent or meaning of the war exclusion.
War is defined, in part, by Black’s Law Dictionary to mean, “Hostile conflict by means of armed forces, carried on between countries, states or rulers….” Notice that a war involves and requires organized and armed governmental authorities with a common agenda.
Participants in these protests and riots are largely unrelated groups without a common leader, direction or goal. The actions do not appear to be within the meaning of war, nor do they appear to active the war exclusion.
But do these acts qualify as an “insurrection” triggering the insurrection part of the exclusion? First, what is an insurrection and who is an insurrectionist?
• Insurrection: A violent revolt against an oppressive authority, usually a government. “Insurrection is distinguished from rout, riot, and offense connected with mob violence by the fact that in insurrection there is an organized and armed uprising against authority or operations of government, while crimes growing out of mob violence, however serious they may be and however numerous the participants, are simply unlawful acts in disturbance of the peace which do not threaten the stability of the government or the existence of political society.” (Black’s Law Dictionary)
• Insurrectionist: A person who takes part in an armed rebellion against the constituted authority (especially in the hope of improving conditions) freedom fighter, insurgent, rebel.
Based on the supposed purpose of the threatened protests, the acts do not appear to qualify as acts of insurrection, nor are the participants insurrectionist. The various groups are not necessarily organized and often don’t have a singular goal. Note again the meaning of “insurrection” taken from Black’s Law Dictionary.
Two legal concepts also apply to limit the application of the insurrection exclusion: Noscitur A Sociis and/or Ejusdem Generis. Both concepts essentially state that a term within a list is judged by the words around it and are not given their broadest possible meaning. More specifically, these concepts are defined as follows:
• Ejusdem Generis: Latin meaning, “of the same kind.” In the construction of contracts, when certain things are enumerated, and then a phrase is used which might be construed to include other things, it is generally confined to things of the same type. General words are not to be construed in their widest extent but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned.
• Noscitur A Sociis: Latin for, “the meaning of a word may be known by its accompanying words.” The word or phrase is defined in its context.
Based on these legal concepts and given the context of the term “insurrection,” it’s apparent that the exclusion applies only when there is armed conflict in an attempt to revolt and/or overthrow a government by the actions of another recognized government or militia. Even if the “overthrow of the government” is a stated goal of one of these protest groups, they are not a government or state-sanctioned group, they are just malcontents mad because they didn’t get their way.
As stated earlier, there does not appear to be any specific exclusion in ISO’s unendorsed CP 10 30 (Causes of Loss – Special Form) applicable to any protests arising out of the election results. Don’t let news media accounts of “insurance issues” scare clients.