The civil unrest that has since quieted over the winter has the potential to flare again as the trial of Derek Chauvin for the murder of George Floyd is set to begin Monday, March 8, 2021. City leaders in Minneapolis have been urging business owners to take precautions ahead of the trial. Businesses with the proper insurance policies in effect most likely have some type of protection in place. But statistics show us that only roughly half of businesses are covered by these policies, putting themselves at significant risk, especially those businesses that are more prone to being subjected to civil unrest. Most small and medium employers (those with up to 100 employees), should have businessowner policies (“BOPs”) that cover property, liability, and business income protection when the business is closed due to damages.
For those businesses that have BOPs or for those who have been considering getting a BOP, there’s a lot to think about when considering civil unrest. Below is an outline of the three major phases of civil unrest and how a business can effectively navigate damages if the proper policies are in effect.
The first stage is really all about being aware of what you have and your potential exposure to risk. For example, if your business is located in an area more or less likely to experience civil unrest.
BOPs contain provisions, usually identified as the “perils and risks” of the business, that will identify coverage. For example, in most small business insurance policies, “perils and risks” usually covers damages to windows, doors, light fixtures and contents (such as furniture, office supplies and related machinery). Each policy should specify what exactly is covered, how much will be paid in the event of loss and any related deductibles. Recognizing that each policy is different, it is important to carefully look over the BOP’s language to ensure that there is sufficient coverage for the business’s need.
On a related note, damages to vehicles during civil unrest is usually included in the auto’s comprehensive insurance policy. Please note that these comprehensive auto policies are usually optional. Therefore, it may be a good idea to see what coverage is in place for the business’s vehicles, especially if they are retained on the business’s property.
Ideally, there are additional copies of any insurance policies. A copy is located on the business’s premises, but other copies should be located in safe but distant locations, such as a home office. This will make it easier to negotiate the claim process and understand what is and is not covered.
While no one could have anticipated the extent of the unrest in the wake of George Floyd’s death, city leaders are anticipating unrest during proceedings and conclusion of the trial, and are urging businesses to prepare. Phase two occurs immediately before and during civil unrest.
In many of these policies, there are provisions that encourage the policyholder to mitigate as much of the damage as possible, such as boarding up all accessible points and sending employees home. Small business policies commonly include provisions that will cover the costs for protecting the business, such as boarding up windows and doors.
Employees must be also kept safe. While some employees may volunteer to remain at the property and try to safeguard it from harm, this is not an acceptable option. Liability rests on the business to ensure that not only the contents of the building are safe but also its inhabitants, the employees. If an employee stays behind on the employer’s guidance to protect the property, then the employee is acting as the employer’s agent and the employer should be liable for any harm that comes to or is caused by the employee. Therefore, it’s wiser to send the workforce home and to safety.
Once the danger has passed, the business enters phase three. This phase includes filing a claim, assessing the damage and securing the site so that additional liabilities and harms do not occur. For some businesses, this may mean re-boarding up all points of entry and making small repairs if necessary to prevent further harm, such as stopping a gas leak. But major repairs should be put on hold until the insurance adjuster has had an opportunity to review the property as this may negate the recoverable amount.
Documentation of the damage is crucial, especially if, unfortunately, additional damage is done to the property by nature, determined trespassers or some other event. Therefore, the businessowner should have pictures of the damage taken and reserve any receipts for any type of necessary repairs that they have made in the interim before the adjuster has had the opportunity to assess the damage.
While a business may be tempted to save money and do the clean-up itself, it really would be wiser to hire a professional cleaning service, especially if the BOP provides coverage for such services. Having employees handling potential harmful and dangerous items can increase the business’s potential for liability should someone get harmed. But if there is no way to get around having employees perform cleaning services, the business should ensure that they are provided with proper safety gear, such as protective eyewear, gloves, hardhats, dust masks and other relative gear.
Kat provides employer-focused guidance on compliance solutions with an emphasis on employee benefits.
Kat is a compliance and workplace solutions consultant for USI. In this position. She provides employer-focused guidance on compliance solutions with an emphasis on employee benefits. She helps to translate the complexity of employment compliance laws into an understandable solution for clients. Kat joined USI in 2019, prior to that she worked in the insurance industry providing compliance assistance to employers of all demographics. Kat began her employee benefits career working with the United States Department of Labor in the Chicago Regional Office as an investigator and coordinator of the Voluntary Fiduciary Compliance Program (VFCP).
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