03/05/2017
The world is an uncertain place at present. If someone predicted even as little as 12 months ago that Britain would leave the EU, Donald Trump would be President of the United States and Marine Le Pen would be in the final running to be France’s next President, they would probably have been laughed out of the room.
No one is laughing now
With public emotion running high and an election coming up in six weeks, many businesses and insurers will be concerned about rioting, especially with memories of summer 2011 still relatively fresh in their minds.
Prior to the 2011 riots, damage from riots was governed by the Riots (Damages) Act 1886. Written in the days before the internet, AI, mobile technology, even the car (Karl Benz patented the first automobile in 1885/86) – it was unsurprisingly seen as an inadequate piece of law in 2011.
Reading the riot act
The 1886 Act was not the first piece of legislation to cover rioting. The Riot Act 1714 (removed only in 1973 by the Statute Law (Repeals) Act of that year) was tough on those who rioted. Under the 1714 Act, if more than 12 people, “unlawfully, riotously, and tumultuously assembled together,” a Justice of the Peace (or other specified local official) could demand the assembly disperse within an hour and “peaceably to depart to their habitations or to their lawful business.”
If those assembled did not comply, they were liable to “suffer death” as felons.
Unfortunately, human nature has changed little in the last 297 years (although thankfully we no longer put criminals to death). In August 2011, many businesses and insurers suffered significant loss and damage due to days of rioting.
And it could happen again.
The changes brought in by the Riot Compensation Act 2016
Although the Riots (Damages) Act 1886 enjoyed a long shelf life, it received a lot of criticism in recent years for being archaic and unsuitable for modern business life. For example, under the 1886 Act, victims only had a 14-day window for which to make a claim. It also failed to provide for vehicles, computers, and other essential work equipment ubiquitous in modern workplaces.
The main features of the Riot Compensation Act 2016 are as follows:
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claimants now have 42 days to provide notice of a claim and a further 90 days to provide evidence to support it
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if vehicles are not covered for riot damage under their vehicle insurance, protection is provided under the Act
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if goods are damaged, they will be replaced with new versions
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consequential losses, such as lost rent to landlords and loss of trade are not covered
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what constitutes a riot will be decided by the police and crime commissioners
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insurers who have met claims can claim compensation from the local policing body
The 2016 Act also provides for a £1 million cap on the amount that can be paid out on a single claim.
This cap may require businesses and landlords to review their insurance policies for damage caused by riots.
Originally, the government proposed that only businesses that turned over £2 million or less would be allowed to claim under the Riot Compensation Act 2016. However, the Association of British Insurers (ABI) rejected this, stating only around a third of claims from the 2011 riots would have been allowed under this cap.
What businesses need to watch out for
The biggest trap for businesses is that consequential loss is not covered under the 2016 Act. This means it is essential to have business interruption insurance to ensure you can pay your creditors and rent if you are unable to trade for a period after a riot.
It is also vital to engage an emergency response team to manage your claim should your business be subject to damage by rioting. Disputes between insurers and the insured can still arise; by instructing an experienced solicitor who can quickly collate evidence of damage and the circumstances that caused it, any dispute is likely to be resolved more quickly and cost-effectively.
Fisher Scoggins Waters are a London based law firm who are experts in construction, manufacturing and engineering law. We act for insurers and insured. If you would like more information about the Riot Compensation Act 2016, please phone us on 0207 993 6960.