Carl owns the Capital Cafe, a popular restaurant located on Main Street in downtown Cityville. The restaurant building (which Carl owns) and its contents are insured under a commercial property policy. The policy includes business income and extra expense coverages.

One evening several hundred Cityville residents march down Main Street. They are protesting the use of public funds to construct a new sports stadium.


The demonstration proceeds peacefully until a group of stadium supporters arrives. The supporters and marchers exchange insults and a fight erupts. Then someone throws a rock through a plate glass window and a riot breaks out. Rioters begin looting and vandalizing local businesses. Suddenly, a mob storms into the Capital Cafe and chaos ensues. Police eventually arrive and the riot is quashed.

It is now the following morning and Carl is surveying the damage. The cafe's front window has been shattered and the door is damaged. Light fixtures have been ripped off the walls. Broken furniture is strewn across the dining room. Smashed wine bottles, fractured glassware and torn tablecloths litter the floor. The kitchen remains intact but the refrigerator and freezer have been stripped of food. Looters also stole several cases of liquor.

Carl phones his property insurer to report the damage. An adjuster arrives a few hours later. When the adjuster departs Carl assembles a cleaning and repair crew.

He replaces furniture, glassware and other items that were destroyed by the vandals. He replaces the looted food and liquor.

It's now three days after the riot. Carl is about to reopen the cafe when he hears some bad news. The local fire department has closed Main Street for at least two weeks! Apparently, rioters set fire to a hotel located half a block from the cafe. The building was severely damaged and is in danger of collapse. Main Street will be closed until the building can be stabilized.

Carl is distraught. He has already lost three days of income and the street closure will cause him to lose much more! How much of his property damage and income losses will be covered by his property insurance?

Physical Property Damage

The window pane, door and light fixtures that were damaged during the riot are part of Carl's building. Thus, these items should be covered under the Building coverage included in Carl's policy. The glassware, furniture, tablecloths, food, liquor and other items that were damaged or stolen should qualify for coverage under Carl's Business Personal Property coverage. The damage will be subject to the limits (specific or blanket) and deductibles listed on his policy.

Riot, Civil Commotion, Vandalism

Most commercial property policies cover damage caused by any peril that is not specifically excluded. Riot, civil commotion and vandalism are not typically excluded. Consequently, damage caused by any of these perils should be covered.

Many policies do not define riot, civil commotion or vandalism. Legal definitions of riot vary but the term typically means a disturbance of the peace involving at least three people. To constitute a riot, the individuals must act together to commit violent acts against other people or property. A civil commotion is similar to a riot but generally involves more people. Riot and civil commotion can be difficult to differentiate so the perils are often listed together. Vandalism refers to the intentional destruction of another party's property. Because the damage to Carl's property was caused by perils that aren't excluded, the damage should be covered.

Loss of Income and Extra Expense

Carl's business has lost three days of income due to physical damage to his cafe caused by rioters and vandals. The loss of income should be covered by his business income insurance. Carl probably incurred some extra costs to get his business up and running so quickly. For instance, he may have paid extra transport costs to have food and other supplies rushed to his cafe. These added costs should be covered under Carl's extra expense coverage.

What about the loss of income the cafe will suffer due to the street closure ordered by the fire department? Business income insurance normally includes Civil Authority coverage. The latter covers  a loss of income that occurs because access to your premises has been prohibited by a civil authority, such as a fire department. Access must be prohibited due to damage by a covered peril to property not located at your premises.

Civil authority coverage applies for a limited period of time, typically three to four weeks. You may be able to extend this time period by paying an additional premium.

The fire department has denied access to the area around Carl's restaurant due to fire damage to a nearby hotel. Thus, the income Carl loses due to the street closure should be covered (subject to the numbers of days for which coverage is provided in his policy).

Waiting Period

It's important to note that many property policies include a waiting period (a type of deductible) under business income insurance. The waiting period also applies to civil authority (but not extra expense) coverage. A typical waiting period is 72 hours.

Business income coverage applies to a loss of income you sustain due to a suspension of your operations during the period of restoration. When a waiting period applies, the period of restoration begins 72 hours after the physical loss. If Carl's business income coverage includes a 72 hour waiting period, the income he lost during the three days his business was shut down due to the riot will not be covered. A waiting period will also likely apply under his civil authority coverage.

Not all property policies contain a waiting period under business income coverage. Your agent or broker can help you determine whether your policy contains this restriction.