Protests that lead to
widespread civil unrest and violence usually result in significant property
damage, as evidenced by the estimated $9 million in damages sustained by
businesses during the riots in Baltimore. Traditionally, domestic
demonstrations of civil unrest have been localized and rare. Somewhat unusual
to the U.S. and currently on the rise, is the spread of civil unrest in waves from
one location to another organized around the same issue.
For businesses to survive an
episode of civil unrest, advance planning is required. Having the right insurance
coverage and creating a business continuity plan will help position your
business to survive, should civil unrest occur in your area.
“We’re going to see cities starting to plan as a result of the civil unrest seen
in other cities, like Ferguson and Baltimore. Just because an incident didn’t
occur in your home town, doesn’t mean it can’t,” said Hart S. Brown, VP,
Practice Leader, Organizational Resilience, HUB Risk Services.
A new NBC News/Wall Street
Journal poll says 96% of Americans say they expect more racially charged unrest
around the country this summer and more than half, or 54%, believe a similar
disturbance is likely in the metropolitan area closest to where they live.
“After a natural disaster
there is damage and destruction and the next day we start to rebuild, but in
the case of civil unrest, there’s a lack of being able to feel safe and secure
so the recovery time frame from these events is much longer and costs are
higher due to loss of businesses, property values and tax revenue. Some issues
can linger for years to come,” said Brown.
Insurance considerations for civil unrest
Well before civil unrest
develops, businesses should review applicable insurance coverage options that
apply, such as property, auto, business interruption, political risk, supply
chain and trade credit insurance.
Businesses should start with
a standard property policy that will cover fire, riot, windstorm, hail,
collision and auto. This policy protects against direct physical damage and
loss of income. However, it is important to know that most middle-market
policies aren’t triggered until there is direct damage to the building. “If the
riots are two blocks away and your business is physically fine, but no one is
frequenting it, you’re still going to have a loss of revenue,” said James
Stuart, Hub International Chief Sales Officer (California).
Therefore, you may want to
confirm that your policy has ingress/egress coverage in your standard property
policy. This protects you in the event that customers are precluded from
frequenting your business due to civil authority - either the result of a
curfew or blockade.
Another important policy
consideration is your deductible, as some policies will attach a time element
to the deductible where vandalism or loss of revenue is measured in 24, 48 or
72-hour increments. For example, if your building is hit multiple times, the
insurance company could potentially hit you with a different deductible every
24 hours.
“You don’t know when civil
unrest is going to come and what’s going to trigger it,” said Stuart. “Businesses
must come from a position of strength – make sure you’ve got the appropriate
coverage.”
Business considerations in civil unrest
During civil unrest,
protesters may target businesses in order to steal property, gain publicity and
for purposes of revenge. Curfews, cessation of public transportation, closing
of main transportation corridors and loss of telecommunications or even power
can occur. These can all result in a reduction in access to local businesses
and therefore, planning ahead will be key to survival (see HUB Civil Unrest
Risk Bulletin).
Have
a business continuity plan. By planning for possible interruptions through
proactive production increases, allowing early inventory shipments, rerouting
deliveries or relocating critical resources, a crisis can be managed more
seamlessly. Some considerations for a business continuity plan include:
- Identify how to communicate updates to the workforce on government
advisories, changes to business operations and payroll processing
- Determine critical functions that need to be sustained and
identify potential workarounds
- Identify offsite work locations or work from home options if main
office is inaccessible
- Consider hiring security guards (review local regulations to
ensure compliance)
- Prepare for an increase in possible cyber hacking activity, as
there can be a correlation between computer hacking and local civil unrest
- Plan for multiple waves of civil unrest, with down time in between
Don’t forget to remind your
company leaders what their roles are in regard to the business continuity, conduct
a physical security audit to determine any weak points in the plan and make
contact with local authorities to discuss your plan before any civil unrest.
Brief
your employees. Teach your employees how to keep themselves safe at work. How can
they minimize as many potential problems as possible? This could include
closing early, allowing those with long commutes to leave early, identifying
potential work from home options, rescheduling meetings and deliveries.
Increase
your physical security. If your business is a potential direct
target, increase your physical security, whether that means bringing in
security guards or boarding up windows or doors. Brainstorm other ways to increase
your physical security.
Contact your HUB advisor to
assist in identifying your risks, building a business continuity plan and
identifying appropriate insurance coverage to fit your needs.