In the aftermath of widespread and continued looting, we have received inquiries from clients regarding potential damage to their property. Most want to know if their homeowner’s insurance will pay for property that is damaged or stolen during the course of a riot or other forms of civil unrest.
The short answer to these types of inquiries is usually “yes”; however, a review of the type of home insurance policy and the contract language is needed for a definitive answer. Most home insurance policies are either a HO3- or HO5-type of policy. The HO3 policy is a good type of policy, but the HO5 provides more coverage. The best way to know which one you have is to ask your agent. At the Plexus Groupe, we always recommend an HO5 policy and will issue that type of coverage if it is available for the home being insured.
Whether the policy is an HO3 or HO5, there are three main types of property that are being covered. The first is the house itself, often called the Dwelling. The second type of property is Other Structures or Detached Structures. This covers things like detached garages, sheds, above-ground pools, and hardscaping (driveways, patios, etc.). The third type of property is Personal Property or Contents. This covers all of your furniture, clothes, home electronics, linens, food, tools, etc. This is everything you would put on a moving van if you sold your house.
With an HO3 policy, the Dwelling and Other Structures are insured for Open Perils and the Personal Property is insured for Named Perils. But what does that mean?
With Open Perils, coverage is assumed, and the burden is on the insurance company to prove that it is not covered. With Named Perils, the loss that occurs (the “peril”) must match one of the bad things listed in the policy.
With an HO5 policy, the Dwelling, Other Structures, and Personal Property are insured for Open Perils. Here’s an example of how coverage would differ between the two types of policies:
Let’s say you are painting the ceiling in your living room and you knock a bucket of paint off the top of your ladder. You weren’t real careful with the drop cloth, so the paint gets on the floor, the walls, the couch and the coffee table.
With an HO3 policy, the floor and the walls would be covered (they are part of the Dwelling) because there isn’t a specific exclusion for dropping a bucket of paint. The couch and the coffee table would not be covered because dropping a bucket of paint is not one of the Named Perils listed in the policy. With an HO5 policy, all of it would be covered.
So, getting back to the original question – Is property covered if it is damaged or stolen during the course of a riot or civil commotion?
Yes, damage to the Dwelling would be covered, damage to Other Structures would be covered, and damage to Personal Property would be covered – unless the policy specifically excludes this type of loss.
A sample review of policy language from several different insurance companies suggests that this type of loss is not excluded.
OK, so it looks like we have coverage. Are there any limits to that coverage? There could be. If looting or theft occurs, certain types of property are naturally more desirable to take than others. Cash, firearms, and jewelry readily come to mind. If a $100 dollar bill is sitting on your $2,000 kitchen table, which one is more likely to get stolen?
You generally can’t buy more coverage to insure cash, but if you have jewelry or firearms, you may want to buy additional coverage through a Personal Articles endorsement or a separate Personal Articles policy. Note that some insurance companies may not provide any coverage for firearms as a matter of corporate policy.
If you have any questions about your coverage, please contact a member of the Plexus Private Client Solutions team. We will be happy to research your question and provide you with an answer.
David Miller is The Plexus Groupe’s Vice President, Client Executive for Private Client Solutions. Miller can be reached by calling 846-307-6141.
