Damage from riots across US will cost at least $1B in Claims

“The damage from riots and looting across the U.S. following the death of George Floyd is estimated to be the costliest in insurance history – between $1 billion and $2 billion.

Insurance Information Institute (or Triple-I) compiles information from a company called Property Claim Services (PCS), which has tracked insurance claims related to civil disorder since 1950, and other databases. It provided reports to Axios that the damage from unrest between May 26 and June 8 will be the most expensive in the nation’s history, surmounting the Rodney King riots of 1992 in Los Angeles.

The price tag could be as much as $2 billion and possibly more, according to Triple I. But the protests related to Floyd differ from others the database has tracked – never before have they been so widespread.

“It’s not just happening in one city or state – it’s all over the country,” Loretta L. Worters of the Triple-I told Axios. “And this is still happening, so the losses could be significantly more.”

The last time PCS compiled insurance losses for a “civil disorder event” was 2015, when riots erupted in Baltimore after Freddie Gray died from a neck injury in police custody. But those riots did not even accrue $25 million in damages.

Other big losses on the list include the Watts riots in Los Angeles in 1965, the 1967 Detroit riot, and the New York City blackout of 1977.

The insurance industry is bracing for possible unrest following the November election. “There could be riots that lead to significant losses that would meet our reporting thresholds,” Tom Johansmeyer, head of PCS, said. The company classifies anything over $25 million in insured losses as “a catastrophe.”

Riots and peaceful protests against police brutality have not only ripped through America’s major cities but also its rural areas – from Lancaster, Pa., to Kenosha, Wis.

Civil unrest, compounded by rapid-spreading wildfires, have been nearly constant in cities on the West Coast.”

So, the big question is – “Will these riots affect MY insurance premiums?”

Information from other recent articles shed light on this subject –

“When Riots erupt in the United States often in the wake of racial tensions created by police activities we need to look at the total picture. Often beginning as peaceful protests, these demonstrations sometimes degenerate into violent riots where people and property suffer harm, leaving innocent people to pick up the pieces.

This has led many to ask who should pay for the damage after a riot?

The first entities that typically must pay for these injuries and damages are insurance companies. When a property owner suffers losses thanks to rioters, insurance policies will often cover the losses. Similarly, those injured on someone’s property may be able to seek relief from the insurance company of the property owner. And, of course, the insurance of motorists whose vehicles are damaged in a riot typically pay for those losses, as well.

The civil disturbance that started in Minneapolis is an unprecedented property insurance catastrophe that will likely impact policy renewals and could even persuade some insurers to exclude coverage for damage caused by riots, executives for Verisk’s Property Claim Services said.

“In the U.S., there has been no precedent for a riot catastrophe like this,” Tom Johansmeyer, head of PCS, said during a telephone interview with the Claims Journal. Johansmeyer offered no prediction about total damages. But he did say that this year’s civil disturbance was the first ever to cause substantial property losses in more than one state. That breadth of damage is bound to affect the thinking of property underwriters, especially those who insure large national retailers. He said up to now, insurers have thought of rioting as a local risk that can be controlled by building a geographically diverse book of business.

Janet Ruiz, director strategic communications for the Insurance Information Institute, offered more detail. She said riot losses will surpass the previous record for civil unrest damages that was set in 1992 from rioting that erupted during protests after a jury acquitted police officers who had been videotaped beating Rodney King. PCS said insured losses from that event reached $775 million, or about $1.4 billion in 2020 dollars, according to the Insurance Information Institute.

“This will be a bigger event than the LA riots given the volume of locations that had losses around the country,” Ruiz said. “It’s shaping up to look like it could be in the hundreds of millions. The insurance industry is prepared financially to handle these claims.”

So, rest assured that ALL premiums will probably go UP in the years to come because of the riots, protest and destruction of property across the US in 2020. This does NOT consider the claims that may arise from the COVID-19 and the number of Hurricanes that have been a part of 2020.

So, hold on tight – get ready for higher insurance costs!