ABI Explains UK Riot Coverage; Damages Estimated to Exceed $162 Million

The Association of British Insurers has issued a set of guidelines and an explanation of the insurance coverage incident to the recent riots in London and other UK cities. The ABI estimates that insured losses and damage suffered by individuals and UK businesses are likely to be well over £100 million [$162 million].

The ABI reassured policy holders that they are covered for riot damage under their home and business insurance and claims.

The ABI said that, contrary to some reports, neither the Home Secretary nor the police need to designate the events as a ‘”riot” for police compensation schemes to be activated. The law sets out a range of criteria for this, for example the number of people causing a disturbance.

Following a meeting with the UK’s Home Secretary, who has overall responsibility for law enforcement, the ABI said it had requested that she extend the claims period to the police compensation schemes from the usual 14 days to the maximum 42 days to give people the time they need to assess the damage and submit their claim.

The ABI urged people to contact their insurer as soon as possible to start discussing their claim, noting that many of the companies have set up 24 hour help lines.

British law defines the term “riot” and provides for compensation, if the events are found to be covered by section 1 of the Public Order Act. If so, “those losses will fall within the scope of the loss compensation scheme under sections 2 and 3 of the Riot (Damages) Act 1886.” The statutes exact words defining a “riot” are: “12 or more persons who are present together use or threaten unlawful violence for a common purpose and the conduct of them (taken together) is such as would cause a person of reasonable firmness present to fear for his personal safety, each of the persons using unlawful violence for the common purpose is guilty of riot.”

Under the law the police, i.e. the government, are required to compensate those individuals and organizations who suffer loss or damage as a result of a riot. There is no cap on the level of compensation that the police may have to pay to those persons under the scheme, ABI said.

In addition the riot loss compensation scheme applies to all persons and organizations who suffer a riot-related loss regardless of whether they are insured, the ABI said.

Insurers are also able to claim under the riot compensation scheme for the amount of any claims they have to pay out to their policyholders in respect of riot-related losses and damage.

While the usual period for making a claim under the statute is 14 days, the law allows for flexibility. The ABI said that in the current situation, where “properties, residences and businesses damaged and destroyed are currently crime scenes or are entirely unsafe due to structural defects caused by fire for example,” it believes the the period to report a claim for losses should be extended.

Source: Association of British Insurers