Compensation advice for uninsured riot victims

Thursday, 11 August 2011 9:25 AM

It's been estimated that the damage caused by riots in London, Manchester, Birmingham, Nottingham and several other British cities over the past week will cost insurers over £100 million – but what about people and businesses who weren't insured?

The Association of British Insurers (ABI) offers the following advice to uninsured groups and individuals affected by riots and looting:

On current estimates insured losses and damage suffered by individuals and UK businesses are likely to be well over £100 million.

When a riot happens a statutory police compensation scheme is activated to provide compensation to organisations and individuals for losses that they could not possibly have predicted. This compensation scheme has existed on the statute books since 1886 with its operation having stood the test of time for the last 125 years.

The scheme means that people who are under insured or do not have insurance have somewhere to go for compensation and redress. Other organisations, including insurers, can claim under the scheme for money they have paid out to their customers for loss and damage they have suffered as a result of the rioting, although insurers will themselves be liable to pay for business interruption losses, which are not covered by the scheme.

The scheme means that people do not have to pay higher premiums every year to insure their home or business because of a riot which may only happen once every thirty years. For example, shopkeepers in Tottenham have still been able to get insurance, despite events in 1985, and have not had to pay extra because the police compensation scheme gives individuals and organisations, and their insurers, certainty that costs of the unexpected will be covered.

Contrary to some reports, neither the Home Secretary nor the police need to designate the events as a “riot” in order for the police compensation scheme to be activated. The law sets out a range of criteria for this, for example the number of people causing a disturbance.

We met with the Home Secretary on Tuesday and have written to ask her to extend the claims period to the police compensation schemes from the usual 14 days to the maximum 42 days to give people the time they need to fully assess the loss and damage they have suffered and properly submit their claim. (Editor's note: the claims period was extended to 42 days shortly after this article was published.)

Insurers’ priority is to support people affected by the riots in London and other major cities, and people are urged to contact their insurer as quickly as possible to start discussing their claim. Many firms have 24 hour helplines and are on hand with support and advice.

Full legal information for people seeking compensation for riot-related damage is below:

1. There is no need for someone to designate the events as being a riot for it to fall within the scope of the police compensation schemes. A number of different criteria can be used, such as number of people involved.

2. Provided the event giving rise to these losses falls within the scope of the offence of “Riot” under section 1 of the Public Order Act those losses will fall within the scope of the loss compensation scheme under sections 2 and 3 of the Riot (Damages) Act 1886. The wording says: "12 or more persons who are present together use or threaten unlawful violence for a common purpose and the conduct of them (taken together) is such as would cause a person of reasonable firmness present to fear for his personal safety, each of the persons using unlawful violence for the common purpose is guilty of riot."

3. Under this scheme the police/government are required to compensate those individuals and organisations who suffer loss or damage as a result of a riot. There is no cap on the level of compensation that the police may have to pay to those persons under the scheme.

4. The riot loss compensation scheme applies to all persons and organisations who suffer a riot-related loss regardless of whether or not they are insured. Insurers are also able to claim under the riot compensation scheme for the amount of any claims they have to pay out to their policyholders in respect of riot-related losses and damage.

5. In order for a person or organisation to claim under the riot compensation scheme that person is required to lodge his/her claim within 14 days* of the date of the riot giving rise to the loss or damage.

6. However, this 14 day notice period may be extremely difficult, if not impossible, for individuals and businesses to comply with in the current situation. In many cases the properties, residences and businesses damaged and destroyed are currently crime scenes or are entirely unsafe due to structural defects caused by fire for example. In such cases owners are prevented from entering their homes or business premises to assess the damage they have suffered. In this case it is impractical and unreasonable to expect a person or organisation to have properly assessed their situation and have submitted a claim especially as many individuals are likely to be entirely unaware that the riot compensation scheme exists even if they don’t have insurance within that very short 14 day period*.

7. However, the police (most likely on direction from the Home Secretary) have the ability to extend this 14 day notice period to 42 days*.

8. We have written to the Home Secretary today to ask her to use her authority to instruct the police to issue a direction stating that the compensation claim notification period under section 2 of the Regulations under the Riot (Damages) Act 1886, as to claims for compensation (1921) be extended for all claimants from 14 days to 42 days to enable individuals and UK businesses to properly assess and submit their compensation claims for riot-related losses and damage*.

All of the above information has been obtained from ABI.org and can be found in a PDF document entitled ABI Guidance on legal position of riot compensation at the following site: ABI.org.uk/Information/Riots/Riots_August_2011.aspx.

*Shortly after this article was published, the claims period was extended from 14 to 42 days.

Tags:
• crime
,
• insurance
,
• london riots
,
• riots
,
• uk property features