Background

What is riot?

What is civil commotion?

Riot versus insurrection

Other points of discussion

Background

Riot or civil commotion coverage was originally included with other extended coverages for two reasons. First, fire policies in effect when extended coverage was devised excluded fire damage caused by rioters (this did not change until the introduction and wide acceptance of the 1943 New York Standard Fire policy); so, inclusion of the riot and civil commotion coverage in the extended coverage endorsement eliminated the exclusion of fire damage resulting from riot. Second, the labor disturbances of the 1930s demonstrated a need for this coverage. The riot clause on the causes of loss forms states that the coverage includes loss or damage caused by "acts of striking employees while occupying the described premises." To the drafters of the extended coverage provisions, the need of the insured for protection against damage done by strikers called out for a way to provide that protection; the riot clause answered the call.

The Mississippi Supreme Court, in Blackledge v. Omega Ins. Co., 740 So.2d 295 (Miss. 1999), listed four necessary elements necessary for a riot or civil commotion to exist within the meaning of a property insurance policy:

(1) unlawful assembly of three or more people (or lawful assembly that due to its violence and tumult becomes unlawful), (2) acts of violence and (3) intent to mutually assist against lawful authority. The common law clearly indicates that lawful authority is not limited to official law enforcement, but extends to those whose rights are or may be injured and seek to protect those rights. In addition, there must be some degree of( 4) public terror.

 What Is Riot?

 Black's Law Dictionary defines riot as follows:

 A public disturbance involving an act or acts of violence by one or more persons, part of an assemblage of three or more persons, which act or acts shall constitute a clear and present danger of, or shall result in, damage or injury to the property of any other person or to the person of any other individual; or, a threat or threats of the commission of an act or acts of violence by one or more persons, part of an assemblage of three or more persons having, individually or collectively, the ability of immediate execution of such threat or threats, where the performance of the threatened acts or acts of violence would constitute a clear and present danger of, or would result in, damage or injury to the property of any other person or to the person of any other individual.

 The common law definition of riot is "any tumultuous disturbance of the public peace by three or more persons mutually assisting one another in execution of a common purpose by the unlawful use of force and violence resulting in property damage of any kind."

Merriam Webster online defines riot as: "a tumultuous disturbance of the public peace by three or more persons assembled together and acting with a common intent; public violence, tumult, or disorder".

 Many states have a definition of riot in their criminal statutes. For example, South Dakota defines riot as follows: "Any use of force or violence or any threat to use force or violence, if accompanied by immediate power of execution, by three or more persons acting together and without authority of law." SDCL §22-10-1. Indiana law states, "A person who, being a member of an unlawful assembly, recklessly, knowingly, or intentionally engages in tumultuous conduct commits rioting." IC §35-45-1-2.

Generally, when a state has given the term riot a statutory meaning, the term may still be interpreted according to the common law meaning unless the statute clearly states or implies that the common law meaning has been changed. Of course, some courts have followed the principle that the statutory definition should always be the basis for the coverage decision.

The following court cases examine how these definitions relate to insurance coverage for riot damage.

In Providence Washington Ins. Co. v. Lynn, 492 F.2d 979 (Mass. Cir. 1974), a federal appeals court found that an act of arson by three prison inmates who thought that they were acting secretly (but were actually observed) was not a riot. The court refuted the notion that the extensive disruption caused by the fire was itself enough to constitute a riot, stating: "It is a clear doctrine of the common law that a stealthy act of destruction is not transformed into an act of riot because upon later discovery of the damage there is public disturbance." The court also rejected the argument for insurance coverage on the grounds that there had been no use of force or a threat of the use of force against anyone by the arsonists. The appeals court stated that "the cases wherein destructive activity has been found to be riotous have been ones where the illegal act was accompanied by the use of force, or the threat of the use of force against anyone who might interfere with the criminal enterprise."

Two earlier state supreme court decisions also held that damage done stealthily was not covered under property policies, although done by a sufficient number of people to constitute a riot according to the law of each state. They are International Wire Works v. Hanover Fire Ins. Co., 283 N.W. 292 (Wis. 1939) and Walter v. Northern Ins. Co. of New York, 18 N.E.2d 906 (Ill. 1938). Another case hinging on the element of stealth was Salem Mfg. Co. v. First American Fire Ins. Co. of New York, 111 F.2d 797 (9th Cir. 1940), in which the court held that riot damage had not been established when it was shown that more than three people had been involved in the burning of the insured's factory but that they had acted secretly and without noise. These cases are distinguishable from Insurance Co. of North America v. Rosenberg, 25 F.2d 635 (2nd Cir. 1928), in which the policy was held to cover riot when five men entered the insured's premises boisterously and poured acid on his stock.

In Bituminous Cas. Corp. v. Lynn, 503 F.2d 636 (6th Cir. 1974), a federal appeals court found that there was a riot under the common law definition given above where an armed gang of three or four men assaulted and threatened a night watchman at a Kentucky coal mine, bound him, and planted explosives beneath every valuable piece of equipment on the site, and proceeded to blow up the equipment. The explosions were felt as much as five miles away. The property was insured under the provisions of the Urban Property Protection and Reinsurance Act of 1968, administered by the Department of Housing and Urban Development (HUD). The Secretary of HUD argued that the definition of riot was limited by the motivation behind the act and that there should be riot coverage only for riots motivated by social or political reasons and not by "labor strife unrelated to…ideological or racial disturbances." The court refused to read the policy so narrowly, finding nothing in the legislative history of the act to support such a reading and applying the rule that ambiguous terms must be interpreted in the light most favorable to the insured.

The appeals court also specifically addressed the question of whether the acts described amounted to a "tumultuous disturbance of the peace." Answering in the affirmative, the court decided in this instance that "even if the explosions and the terrorizing of the local population were ignored, the assaults upon the watchman were more than sufficient."

In Pan American World Airways, Inc. v. Aetna Cas. & Sur. Co., 368 F.Supp. 1098 (S.D.N.Y. 1973), the court found that the common law definition had changed with time. Fresh from the widespread urban riots of the late 1960s and early 1970s, the court asserted that "the court concludes that if assemblages numbering as few as three could ever make riots for insurance purposes, they do not today." This was, however, a minor point in a case in which the court found that destruction of an airplane by terrorists was not riot.

Another case, also decided soon after major rioting—riots that followed the Rodney King verdict—held that "acts of vandalism and arson committed by several people out of the public view could not collectively be considered a 'riot.'" In North Bay Schools Ins. Auth. v. Industrial Indem. Co., 10 Cal. Rptr.2d 88, the court stated that public disturbance or tumult were necessary elements in defining actions as riot. Although several people broke into schools and ransacked and set fire to them, the court found that the actions, not conducted in public view, did not constitute a riot.

 What Is Civil Commotion?

The meaning of civil commotion is even more obscure than that of riot and has received less attention from the courts. Some authorities doubt that it is possible to conceive of a case in which a loss would be paid under a property policy as a civil commotion but would not be covered under a policy or endorsement referring only to riot. However, the drafters of current forms chose to retain both terms in spite of their intention to simplify policy language.

To find a basic meaning, one must look at the terms separately first. Merriam Webster online defines civil as: "of or relating to citizens; of or relating to the state or its citizenry" and commotion is defined as: "a condition of civil unrest or insurrection"; or "an agitated disturbance". This means that a broad range of actions can be considered a civil commotion. 

Hartford Fire Ins. Co. v. War Eagle Coal Co., 295 F. 663 (4th Cir. 1924) involved the question of whether an exclusion of loss or damage by civil commotion barred recovery by an insured whose property was blown up by union organizers. The United Mine Workers had been organizing in West Virginia, and the governor had declared martial law. The evidence showed conclusively that a conspiracy of five men blew up the mine property in furtherance of union activity. The insured proved that although there had been disturbances in the area, there had been no disorder at the mine or disturbances until the explosion and fire. The explosions and fire were started secretively at one in the morning. The trial court held for the insured and the court of appeals affirmed.

The court quoted the following definition of civil commotion from the legal commentary in Corpus Juris: "An uprising among a mass of people which occasions a serious or prolonged disturbance and an infraction of civil order, not attaining the status of war or an armed insurrection. A civil commotion requires the wild or irregular action of many persons assembled together." The court said that since a serious issue of fact had been raised as to whether the property damage was a consequence of the civil commotion in the general area, or was due to the "independent initiative" of the conspirators, it would affirm the lower court's decision.

 Riot versus Insurrection

The urban disturbances that began with the Watts riot in 1965 and continued throughout the last half of the 1960s raised the question of how riot differed from insurrection (a cause of loss that is generally excluded from insurance coverage—see the exclusion of war and military action in Causes of Loss Forms).

The leading organizations concerned with interpretation of coverage conducted careful research on this question and several published the results. Perhaps the most widely circulated report stressed that while riot and insurrection produce the same result, two elements are necessary to describe the happening as an insurrection: first, there must be a combined effort subject to some organized pattern or program, regardless of whether or not there is centralized control; and second, there must be an organized purpose—intent—directed toward the overthrow of the constituted government regardless of whether there is a chance of success, together with an intent to take possession of the inherent powers of government.

Several of the studies of this question took note of the fact that civil authorities themselves described the trouble in their communities as civil insurrection, criminal insurrection, or state of insurrection, even including such terms in proclamations and orders. The most widely held position of the insurance industry is that such language is not, by itself, sufficient to justify applying the exclusion of insurrection to claims.

 Other Points of Discussion

The phrase "riot or civil commotion" is not specifically defined on the causes of loss forms, although the forms do show that the phrase includes "acts of striking employees while occupying the described premises; and looting occurring at the time and place of a riot or civil commotion." Lacking specificity on the coverage form, insurance coverage for riot or civil commotion is open to judicial interpretation, and, due to that lack of specificity, it is a good bet that judicial interpretations will favor the insured.

If violence to property occurs under conditions that somehow do not constitute a riot or civil commotion, can the loss be covered under the vandalism cause of loss? Vandalism is defined on the causes of loss forms as "willful and malicious damage to or destruction of the described property." Looking at the definitions of riot and "vandalism," it would seem that the main difference is that a riot is more directly connected with a public disturbance than is vandalism. Both causes of loss result in damage to an insured's property, damage due to unlawful and malicious acts. So if an insured claims property loss due to a riot, but is denied coverage by an insurer that is backed up by a local governmental authority that denies any riot took place, the insured should know that a subsequent claim based on vandalism is reasonable.

Does the government have a role in protection from riot damage? If an insurer sells property insurance and then has to pay a loss, that is the name of the game in insurance. However, a riot is a public disturbance and the government has the duty to preserve the public peace. So, is paying a riot loss equivalent to an insurer paying the price for a governmental failure?

Instead of answering that question directly, the response of the Federal government, in cooperation with state governments and the insurance industry, is represented in the Fair Access to Insurance Requirements (FAIR) plans that are in operation in many states. These plans are pools of private insurers established by law to guarantee that people with property in certain urban neighborhoods will have access to insurance despite a high potential for riot loss.

Original March 4, 2013