As I was watching the morning news, I heard some pundits, who obviously had no idea about insurance, claim that those people whose businesses, buildings, and inventories were destroyed by fire, vandalism, and theft during the so-called mostly peaceful demonstrations were not victims, nor were they harmed, because they were indemnified by insurance. That conclusion is unconscionable and totally wrong on its face. They have apparently never read, let alone learned from history.
Insurers are loath to write earthquake insurance on the San Andreas fault, fire insurance in wildfire zones, vandalism insurance for areas inundated with gatherings of unhoused, fire insurance for vacant properties, or flood insurance on the shore of the Mississippi River that traditionally floods every 3 years. No one, therefore, should be surprised if an insurer logically refuses to insure a business against the risk of loss by fire, vandalism, or theft in a location where "mostly peaceful demonstrations" were prevalent. When insurers decide it cannot be profitable to write insurance in those locations, few, if any, will be willing to invest. It becomes unwise, illogical, and impossible for a reasonable insurer to do business in that location.
Riots, civil commotion, and civil demonstrations that were prevalent in 2019 and 2020 in many US cities destroyed billions of dollars worth of property. Many of those destroyed properties were insured. However, some were not insured at all. Those who were insured obtained indemnity up to the limits of their policy and even obtained payments for loss of earnings. Those who were not insured lost everything they had invested in those properties. Those who were insured were, and are, faced with the need to make the decision to rebuild because they will probably not be able to buy insurance to insure against the risk of loss of the rebuilt property.
What those insured did not receive after their buildings burned down was the ability to insure for a reasonable premium the business after rebuilding. What they did not receive was a place to do business for the year or more it took to replace the building that was destroyed. Often, insureds will take the insurance money, demolish the remains, leave an empty lot, and use what is left of the insurance money to start a business in a place deemed safer and more secure.
Other Victims
There is a large group of victims of the fires and vandalism caused by the "mostly peaceful demonstrators" beyond the affected property owners. These other victims include the following.
- The residents of the community whose properties were not destroyed, vandalized, or looted because insurance will not be available
- The uninsured small business owners
- The community whose tax base has been reduced
- Every person who purchases insurance in the United States, since their insurance premium must go up to cover the extra losses
- Every city where demonstrations occurred because the cities will not be able to reinstate the destroyed businesses
- Every insurance company that insured against the risks of loss for the properties destroyed or damaged or the victims of theft
Conclusion
These are not victimless crimes. They destroy the communities where they occur, make them uninsurable, and often make it impossible for the communities to recover. I hope the cities damaged by the "mostly peaceful demonstrations" avoid what kept Watts from being rebuilt. I'm afraid that if history is repeated, the areas affected—Portland, New York City, Chicago, or Minneapolis-St. Paul—will not recover for decades.
© 2021 Barry Zalma, Esq., CFE
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