Coverage for Riot and Civil Commotion

The recent riots in Minneapolis, Atlanta, Detroit, Indianapolis and elsewhere have caused some business owners and homeowners to be concerned about insurance coverage for losses caused by violent acts of destruction of property.  The short answer is that many standard insurance forms do include coverage for such losses, but determining exactly what is covered is a matter of reviewing each individual policy in light of the circumstances of the actual loss and damage.

If your home or business (or auto) is damaged by a riot or “civil commotion”, there is usually coverage for such losses subject to important limitations contained in standard policy forms.  In one standard business coverage form, for example, “riot and civil commotion” are included within the definition of “Specified Causes of Loss”, and coverage for things like building damage and business interruption are available accordingly.

The same policy does not define what constitutes a “riot”.  Courts have reached differing conclusions on what constitutes a “riot” or “civil commotion.”  A riot is defined by Black’s Law Dictionary (9^th ed. 2009) as:

An assemblage of three or more persons in a public place taking concerted action in a turbulent and disorderly manner for a common purpose (regardless of the lawfulness of that purpose).

An unlawful disturbance of the peace by an assemblage of usually three or more persons acting with a common purpose in a violent or tumultuous manner that threatens or terrorizes the public or an institution. 

The main thing to remember is that most business policies will provide coverage for building damages, business losses and extra expenses incurred as a result of a riot.  In the event of such losses, it is important to have your policy reviewed carefully by an insurance coverage professional.

Yes. Parr Richey is open for business. We are here for you.

Yes. Parr Richey IS open for business; and yes, we are taking on COVID-19 related cases.

The attorneys at Parr Richey want you to know we are ready to help you and your business recover from government-ordered shutdowns and the resulting significant interruption to your revenues and productivity.

The sooner you ask, the sooner we can help you get back on track.

Founded in 1899 in Lebanon, Indiana, by W. H. Parr, Sr. the lawyers at Parr Richey have served individuals, businesses and institutions for over 100 years – our strengths are your advantage.

Here are some of the ways we can help:

1. Insurance policies and contracts review to determine whether and to what extent COVID-19 related business losses may be covered or mitigated through insurance or other contractual claims.  We represent policyholders each and every day in claims of all types and sizes and have the ability to answer your questions effectively and efficiently.
2. Legislative relief determination and eligibility. The United States Congress has made an historic stimulus package available to qualifying businesses and individuals.  We can help you determine your eligibility and navigate the legal aspects of the process for getting help.
3. Employment law. Parr Richey attorneys have been helping businesses and individuals resolve employment and labor related issues for decades and we stand ready to answer your questions about how to handle workforce issues large or small.

Contact Mike Schultz at mschultz@parrlaw.com or 317- 501-2233

Contact Jim Buddenbaum at jbuddenbaum@parrlaw.com or 317-439-1181

Insurance Companies Owe Duty of Good Faith and Fair Dealing to Additional Insureds

In a recent opinion, the Indiana Court of Appeals decisively ruled that insurers owe a duty of good faith and fair dealing to all insureds, even if an insured is not the policyholder.

Many insurance policies extend coverage to individuals other than the person or persons specifically listed in the policy. For example, a driver’s automobile insurance policy may cover bodily injury to passengers in her vehicle, or a homeowner’s insurance policy may provide hazard coverage to the homeowner’s mortgage lender if the home suffers damage. In these instances, the individual or entity receiving coverage under another’s insurance policy is referred to as an “additional insured.”

In Schmidt v. Allstate Property and Casualty Insurance Company, Schmidt was injured while riding with a friend, who was insured by Allstate. She sued her friend and the driver of the other vehicle for negligence. Schmidt qualified as an insured under her friend’s Allstate policy, which defined “Insured Person(s)” as “any person while in, on, getting into or out of, or getting on or off of an insured auto with your permission[.]”

After Allstate refused to pay Schmidt the policy limits for underinsured motorist coverage, she amended her lawsuit to include a bad faith claim against Allstate. Allstate argued that it did not owe a duty of good faith and fair dealing to Schmidt since she was not named in the applicable insurance policy.

The Indiana Court of Appeals rejected Allstate’s argument. When a policyholder enters into an insurance contract, the court reasoned, they expect that their family and friends will be treated fairly by their insurance company. The court channeled Gertrude Stein to declare that “an insured is an insured is an insured is an insured” for purposes of an insurance company’s duty of good faith and fair dealing. The court therefore affirmed that additional insureds may be entitled to compensation if an insurance company fails to deal with them in good faith.

What To Do When Dealing With The SIU

If you’ve had a devastating fire at your home or business, you are probably primarily concerned with cleaning up, rebuilding, and getting things back to normal as quickly as possible.  If you had the good sense to purchase an appropriate policy of insurance for your home or business, you have bought and paid for peace of mind.

But sometimes after large losses your insurance company may not be so quick to come to your aid.  Some insurance companies in our experience will refer your claim to what is often referred to as a “Special Investigation Unit” for no other reason than because you suffered a “large loss” – a big fire that destroyed most or even all of your property.

Traditionally, the “Special Investigation Unit” (often called the “SIU” for short) was a tool used by insurance companies to investigate suspected fraud or malfeasance on the part of an insured or someone connected with an insured.  Insurance fraud does occur, and insurance companies are not required to pay fraudulent claims.  However, the unfortunate practice of some companies of referring large losses to the SIU for no reason other than that they are large losses has caused a great deal of grief for many victims of devastating fires who are innocent of any wrongdoing.  SIU investigators in our experience often fail to recognize that their investigations can cause substantial harm to insureds already suffering from a devastating loss by subjecting them invasive and demeaning investigative procedures and heightened scrutiny they do not deserve, and/or by causing needless delay in the payment of valid claims.  Many SIU investigators are retired police officers or others with law enforcement backgrounds who are not adequately trained in the duty of good faith and fair dealing that insurance companies owe their policyholders.  This lack of training tends to compound the problems faced by innocent victims of large fire losses because the SIU investigator does not take the needs and interests of the insureds into account.

When an insured learns that the SIU has been assigned his or her claim, it is important to obtain competent representation as soon as possible.  The insured has the right to be treated fairly during the claims process, and an attorney experienced in handling policy disputes is, in our opinion, in the best position to prevent the involvement of the Special Investigation Unit from causing the insured greater harm. 

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