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Is the looting covered by insurance? Depends on the company


Sean Wotherspoon spent Saturday night at his Los Angeles home, watching the destruction of his businesses live.

He watched security cameras show people smashing the glass windows of his Round Two store on Melrose Avenue and walking out with over $ 250,000 in high-end street clothes. He saw them leave with about as much stock from his neighboring vintage store. He observed that the location for the second round across the country in Richmond, Va., Was carved by fire.

For memory:

06:48, 01 June 2020An earlier version of this article included an incorrect address for a Round Two store. It is located on Melrose Avenue, not North Fairfax.

“I’ve been robbed before, but nothing like it,” Wotherspoon said.

Protests against the Minneapolis police murder of George Floyd continued in cities across the country on Sunday evening, and thousands of Angelenos took to the streets to express their outrage over the apparent impunity of police killing or brutalize black Americans.

Looting accompanied some of the protests. Among the first businesses burgled was a Minneapolis target near the police station of Constable Derek Chauvin, who was charged with third degree murder and manslaughter after killing Floyd while kneeling on his neck while that he was struggling to breathe. In the days that followed, national chains and local businesses were robbed, including in downtown Los Angeles, the Fairfax neighborhood, Beverly Hills, and the Santa Monica beachfront shopping area.

Many businesses were already grappling with reduced revenues and dismal revenue prospects amid the continuing COVID-19 pandemic.

But how and if they bounce back from smashed windows, stolen goods and burnt buildings depends on one factor: their insurance policies.

As Wotherspoon spent his Sunday assessing his stores’ losses, he admitted he wasn’t exactly sure his policy would protect him from this type of damage.

“We are insured, but I don’t know what we are covered for, and I don’t know if we are covered for losses” in the event of civil unrest, he said. “We may not know for about a week.”

Commercial insurance is similar to consumer auto insurance: basic liability is required by many (but not all) owners in a rental agreement, protecting owners in the event that they are faced with a lawsuit. share of customers injured in their stores, among other legal actions. But it may be up to individual business owners to decide how much insurance they want to purchase to cover their inventory and equipment in the event of theft, fire, and other scenarios.

Large chains such as Target, Starbucks and Apple are using their deep pockets to purchase sophisticated policies that cover the entire chain for losses of up to millions of dollars, according to Janet Ruiz, director of strategic communications at the Insurance Information Institute.

But for small businesses, the amount of coverage can vary widely in terms of deductibles and dollar limits, depending on the type of business, the value of the inventory and the depth of the owner’s pockets. Since not all homeowners require businesses to insure their inventory and equipment against loss, some local owners will eventually have to cover all loss and repair costs themselves.

However, for companies purchasing property coverage, this usually includes losses resulting from civil unrest. For those who are insured, packages that include liability and property protection can cost an average of $ 1,200 per year for a small business with up to 100 employees and $ 5 million in revenue, Ruiz said, adding that “It depends on how much they’re willing to spend. if they have a loss.

Restaurants, whose kitchens are at risk of fire, may have to pay for insurance covering their equipment at a higher rate than retail stores where customers browse clothing shelves.

Losses suffered by businesses due to the pandemic are excluded from typical trade policies, although some carriers started offering them following the SARS pandemic in 2003, Ruiz said.

“There were companies that made them, and they didn’t sell,” she said of those policies. “It’s expensive.”

Fraser Ross, owner of the Kitson clothing and gift chain store on Robertson Boulevard in West Hollywood, recorded video across the street as people walked out of the nearby MedMen store break-in, smashing showcases his outlet store and began carrying clothes, accessories and what money was in the till. He estimates $ 300,000 in merchandise was stolen, but believes it will all be covered by his insurance, though he still has to check with his lawyer.

“In 2002, we were robbed at gunpoint for $ 35,000 in watches,” Ross said. “Everything was covered.”

After the city-wide coronavirus lockdown forced Ross to close in late March, he said the only expenses he continued to pay were for his Shopify online store, basic utilities and his insurance policy. He is concerned that some of his neighbors in the shopping district have canceled their insurance policies during the lockdown.

Under normal circumstances, Ross says, he wouldn’t have to replace the windows – many insurance companies offer flat glass coverage as an endorsement on their policies. But since he was technically between two leases with his landlord, Ross will likely have to pay for the repairs.

A few miles east of Kitson, crowds smashed through the door and glass windows of Chi Spacca, the upscale Italian restaurant that operated as the take-out operation Mozza to Go during the coronavirus lockdown. .

Once inside, they took all of the restaurant’s wine, electronics, an empty crate and chef’s knives; thrown plates; and lit a pool of burning lighter fluid on the floor. Next door, in Osteria Mozza, looters took a third of the bar’s alcohol and premium champagne, according to Kate Greenberg, the restaurant group’s director of operations.

“I hope everything is covered” by insurance, Greenberg said. “I don’t see why we shouldn’t be.”

Mozza staff spent Sunday photographing the damage and plan to take a 3D image on Monday to show insurance experts the extent of the damage caused by the fire. “Whether it’s a tossed salad or whatever, we’re taking a photo of it all,” Greeenberg said.

Now, in an attempt to avoid further damage, business owners across town are embarking on storefronts and removing as much valuable inventory as possible. Ross said he climbed into his Kitson stores on Sunday and drove to a pop-up location in Beverly Hills and loaded his car.

“I didn’t know what to pack, so I only took the most valuable items,” Ross said, such as jewelry and sunglasses.

Big business also braced for more damage on Sunday. Target has closed or adjusted the hours of operation of 175 stores across the country in response to the protests, including 49 stores in California. Whole Foods stores in and around Los Angeles, Minneapolis and Chicago remained closed on Sunday, and Walmart and Apple announced that many of their stores would close across the country.

Until this weekend, the two costliest civil unrest in the country’s history occurred in Watts in 1965 and Los Angeles in 1992, following the acquittal of four police officers in the beating of African-American motorist Rodney King.

The 1992 unrest was the costliest in U.S. history, causing property damage estimated at $ 1.4 billion in today’s dollars, according to data analytics provider Verisk Analytics and the ‘Institute for Insurance Information. Watts’ troubles resulted in damages of $ 357 million, which also explains the inflation.

The cost of this week’s troubles has yet to be calculated – but in many cases insurers will likely be stuck with the bill.

California Insurance Commissioner Ricardo Lara has called on insurers to act quickly to help affected businesses recover from the riots.

“Commissioner Lara expects insurance adjusters to be on the ground as soon as possible to help looted businesses access their insurance benefits quickly,” said Michael Soller, spokesperson for the Insurance Department of the state.

Lara will also decide whether or not to issue an emergency declaration that would allow insurers to use out-of-state adjusters to speed up the process, he said. This was done in 2018 in the wake of the Camp and Woolsey fires, when the scale of the damage overwhelmed insurers.

Due to the COVID-19 crisis, Lara ordered insurance companies to reimburse part of the commercial premiums of companies affected by the pandemic until May and asked them to extend the grace periods for paying premiums until mid-July.

Businesses affected by the looting should contact their insurance companies about grace periods and premium discounts. As a result of the actions of the Commissioner, they should be given more time to pay premiums and be eligible for lower rates; they may contact the Department of Insurance for assistance in submitting claims or to ask questions about their coverage.

Times editor-in-chief Genevieve Ko contributed to this report.

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