Riot compensation claims – a quick guide for businesses, landlords and homeowners

We have recently received enquiries in relation to the ongoing and troubling riots across the UK. Premises and businesses across the retail, hospitality and commercial sector are being affected and there will be claims for fire, looting and theft, and malicious damage, amongst others. We advised on a number of the riot damage claims of 2011 which highlighted the need for a change in the legislation at the time as well as the emotional and financial impact on businesses and communities affected by riots.

Since then, the legislation has been overhauled and, in the event of a riot, victims and insurers will be entitled to claim for certain types of loss from the Local Policing Body (“LPB”). The police liability for those loses arises under The Riot Compensation Act 2016 (“RCA”), the Riot Compensation Regulations 2017 and the Riot Compensation (Amendment) Regulations 2018 (“the Regulations”).

The purpose of this article is to provide some key information in the event your business or commercial premises has been affected by the riots.

Claims process

A claimant MUST claim via any relevant insurance first. This is essential – check the terms of your insurance cover and/or speak with your insurance broker about making a claim for damage under the policy. The RCA is designed to meet claims for damage to property that was not insured or not adequately insured for the damage, destruction or theft resulting from a riot.

A claimant must also report the matter to police and obtain a crime reference number.

A claimant can only submit a claim on an RCA claim form for any items which are not insured or for those items for which all or part of the insurance claim is rejected.

The Act (RCA) only applies to a riot and doesn’t apply to damage caused by civil commotion, strikes or political disturbances which are usually covered as standard under most domestic and commercial policies.

Claimants have 42 clear days after a riot to notify the Claims Authority (“CA”) of a claim. There is then a further 90 days from the date the CA receives notification of a claim to submit supporting documentation.

For riots which take place over several days, the 42-day period will commence from the last day of the riot.

Where there are multiple riots across different areas, the time limit will start from the last day of the last riot. However, if there is a gap of 24 hours or more between riots, they will be treated as separate events.

The Regulations include provision to allow late claims where an insurance claim is refused either wholly or in part after the 42-day deadline has expired. The formal letter from insurers will act as the date from which the Claimant has 42 days to then submit an RCA claim.

Any other delays in claims submission outside of the 42 or 90 day periods will require supporting evidence of exceptional circumstances if they are to be accepted.

For Ordinary Claims (i.e. those submitted by individuals or businesses) the RCA Claim Form should be completed and preferably submitted electronically although here are provisions in the Act for submission of claims orally and by post.

Multiple interests (i.e. separate interests in the same property)

For example:

• Claims by both landlord and tenant in a domestic property
• Claims by freeholders and leaseholders and leaseholders’ tenants in a block of flats
• Claims from businesses.

The Regulations are clear that no person or company can submit more than one claim for the same postal address (albeit this differs for insurers).

However, where there are legitimate multiple Claimants, they should each submit a separate RCA claim for their property at that address. There is also a requirement that separate claims for property at the same address does not lead to duplication and each Claimant should only claim for its own property.

Each RCA claim is subject to a £1 million maximum compensation limit and where there are multiple legal interests in the same property, each party will be treated as a separate claimant, and each will therefore be subject to a separate £1 million cap on claim value.

For those businesses or landlords with more than one property damaged as a result of rioting, there is also the ability to make one claim per postal address with each of those claims being subject to a separate £1m cap.

Liability

Only damage or loss that occurs during a riot, as defined in Section 1 of the Public Order Act 1986 can be included in an RCA claim. See definition below:

Definition of ‘Riot’ under POA 1986 s1:

1. Where 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 at the scene to fear for his personal safety, each of the persons using unlawful violence for the common purpose is guilty of riot.
2. It is immaterial whether or not the 12 or more use or threaten unlawful violence simultaneously.
3. The common purpose may be inferred from conduct.
4. No person of reasonable firmness need actually be, or likely to be, present at the scene.
5. Riot may be committed in private as well as public places.
6. A person guilty of riot is liable on conviction on indictment to imprisonment for a term not exceeding 10 years or a fine or both.

It is important to establish whether the circumstances in which the damage was caused come within the definition of riot under the RCA 2016 and each claim will be considered carefully and separately on its own facts. Not all damage will meet the criteria and the evidence leading to the losses being incurred will play an important role in determining whether the damage has been caused by a riot.

Issues such as proximity to riot activity will be relevant. For example, damage to a property in a street a short distance away from riot activity may arise because of opportunistic criminality rather than the actual riot.

It will be called into question whether smaller breakaway groups of less than 12 causing criminal damage away from the riot scene, for example, will fall under the criteria for riot but if the larger group meets the criteria classifying its actions as riot, then the breakaway smaller group can reasonably be considered to be an extension of the group as a whole.

Claims are likely to be validated by reference to evidence including witness statements, CCTV and photographic evidence.

Compensation

The RCA will cover:

• Costs of reinstatement of damaged buildings
• Costs of repairing repairable possessions
• Cost of replacing unrepairable/stolen possessions at the current market value
• Payments are on a new for old basis except for:
  • Motor vehicles – cost of repairs or market value at time of loss covered
  • Business stock – cost of replacing stock or its current market value is covered
  • Second hand stock in trade – will cover estimated restock value.

The RCA will NOT cover:

• Damage to secure facilities such as prisons and immigration centres
• Vehicle damage that is covered by motor insurance
• Consequential loss including loss of trade or rent
• Personal Injury
• Personal items held outside of a building.

Proportional Settlements

If an insurer has applied a proportionate remedy when settling a claim or indeed rejects the claim entirely because of misrepresentation, then the claimant is entitled to claim from the LPB the shortfall or the entire claim subject to the RCA limitations.

The same applies to claims which have been reduced on account of underinsurance and average. The claimant can bring a separate claim against the LPB under the RCA for the uninsured element of the loss.

If you require any advice or assistance with either insurance or Riot Compensation Act claims then please contact Nicola Maher or a member of the Insurance Litigation Team at Edwin Coe.

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