In the midst of a fraught election season, business owners may be starting to wonder about insurance coverage if their property is damaged by a protest or riot. As the November election approaches, independent agents can help commercial clients think through the exposures that political unrest could present.

The standard business owners policy, as well as auto and homeowners insurance, covers physical damage to property caused by a civil disruption, such as a protest or riot. However, policies exclude war and insurrection.

“The most recent widespread instances of civil disruption were after the tragic murder of George Floyd in Minneapolis in 2020," says Mark Friedlander, director of corporate communications of the Insurance Information Institute (Triple-I). “Unfortunately, some of those turned violent, and we saw damage to properties and local businesses."

In contrast, “war is an international issue, typically caused by a foreign adversary—a completely different set of dynamics," he says. “War has always been an exclusion in not only business policies but homeowners insurance as well."

Concerns about insurrection may well be on business owners' minds, in light of the attack on Capitol Hill by supporters of former president Donald Trump after he lost the 2020 election to President Joe Biden. “Insurrection is a unique category to itself," Friedlander says. “Since unfortunately we saw an insurrection after the last federal election, that's a new concern."

Whether insurers will begin considering coverage for this type of loss remains to be seen. “Insurrection has always been a common exclusion in property insurance policies," he says.

Meanwhile, as long as the damage is caused by a protest, riot or civil unrest, or the civil authorities' response, “a standard BOP will cover physical damage to the business, including the structure, contents and inventory," Friedlander explains.

However, a major variable that is not covered by a standard BOP during a protest is loss of income, which is “covered under business interruption insurance, also known as business income coverage, and it's an add-on policy," he says. “It kicks in if there is direct physical damage to the premises, and a civil authority provision triggers coverage for lost income and extra expenses if law enforcement or the fire department bars access to the property."

Important to note, business interruption is only triggered if there's a physical loss to a property. “If a business owner is worried and decides to voluntarily shut down, that's not a covered loss," Friedlander says.

While typically businesses with revenues up to $5 million are eligible for business interruption insurance, “it's estimated that between 30%-40% of U.S. small business owners carry this coverage—which means there's a significant insurance gap, in our opinion," Friedlander says.

While riots may crop up quickly and unpredictably, if a business owner does have some advance warning, such as a planned demonstration with the potential to escalate into a full-blown riot, they can take some risk mitigation steps.

“Board up windows," Friedlander says, also pointing out that some businesses do purchase a separate endorsement for coverage for plate-glass windows. “If there's a concern about impacts of an expected disturbance, are they able to move inventory to a different location?"

“In the past, insurance was about reacting to losses. Now, it's about predicting and preventing losses," he adds. “That's where risk mitigation comes into play—not only with your property but also protecting the people you employ."

AnneMarie McPherson Spears is IA news editor.