Those property owners who have suffered significant damage and loss of profits this week following the extensive UK riots, and their property insurers, must urgently consider their rights to claim for compensation under an old, but still applicable, 19th century statute, the Riot (Damages) Act 1886.
Claims by property owners (and their insurers) for “no-fault” compensation under the Riot Damages Act 1886
This Act provides “no-fault” compensation to those persons who have suffered property damage (and their insurers) as a result of “persons riotously and tumultuously assembled together” which shall be paid out of a police fund in the area in which the riots arose (i.e. the Police authority does not need to have been at fault in allowing the riot to take place or failing to control it).
It is crucial that the claims are prepared and filed in a timely, prescribed and comprehensive fashion as the statutory instrument which governs the time, manner, and conditions which must be satisfied before a claim can be accepted states, amongst other things, that “all claims shall be so delivered within fourteen clear days after the day when such injury, stealing, or destruction took place”, and that any claims must be made in a prescribed form. (UPDATE: On 11 August 2011, the Prime Minister, David Cameron, announced an extension on the time limit for insurance claims under the Act, from 14 to 42 days.)
HFW has experience in advising and guiding both the injured parties and their insurers and adjusters to ensure that claims against the compensation fund are made in time but also that they are in the proper prescribed form and cover all possible losses so that the recoveries are maximised. It is important to note that the fund has the discretion to reject claims where they are out of time or not in the correct form.
It is also important to note that the conduct of the insured can be taken into account in reducing a claim and so insurers should also remind all their insureds of their on-going obligations in that regard as well which may affect the level of indemnity provided by insurers should the insured fail to recover from the fund because of its own conduct.
Where injured parties/insureds have property insurance cover they must also ensure that they satisfy the often strict notification requirements which require them to notify their insurers of any losses caused by rioting (as defined in the policy) within 7 days of them arising. Often insurers work from the outset with their insureds to remind them of the requirements to file claims with the compensation fund within the 14 day period as any recoveries from the fund will off set any indemnity which may be available under any insurance.
It is therefore imperative that insureds work closely with their brokers, but also their insurers, the loss adjusters and their legal advisers as soon as losses from rioting have arisen so that the claim lodged with the compensation fund is in the prescribed form and is drafted as accurately as possible to cover all possible losses.
A variety of issues need to be considered carefully including the legal definition of riot (e.g. How many people? Did they have a common purpose?) and as to what damage is covered (i.e how is a “building” defined and also whether loss of profits is compensated).