Act of God? What's Covered Under Insurance When Vandals Damage Businesses

Looting and vandalism accompanying civil unrest over the past week is a second gut punch to small businesses impacted by coronavirus.

Damage to small businesses has left owners scrambling to not just reopen, but to rebuild, and the cost for that could be passed on to taxpayers.

Santa Monica Music Center owner Lana Fernandez Negrete is trying to figure out how to pick up the pieces without hurting her customers.

The Santa Monica Music Center has been a family owned staple of the community since 1972.

Negrete shared video of when the music stopped Sunday, drowned out by sounds of glass breaking as looters vandalized, and stole.

"They came in and got over a dozen cellos, some trumpets, some flutes, some clarinets, they still got some instruments," Negrete said.

She said in her first call to her insurance company, she was told none of the damage was covered.

"They initially told us that it was like an act of god it falls under civil unrest and that unfortunately a lot of this will not be covered," she said.

Since that conversation, she says her insurer’s tune has changed, she’s filing a claim.

Janet Ruiz of the Insurance Information Institute is a spokesperson for the industry and says all this destruction is covered on standard business policies.

"Business insurance policies do cover riot and civil commotion and many small businesses do carry business insurance policies," Ruiz said.

Ruiz suggests when filing a claim businesses should:

• Take photos
• Do the clean up and protect your building
• Keep receipts for any remediation work
• Contact your agent & file your claim immediately

Businesses can do it all virtually, insurance companies are set up for it due to COVID-19 social distancing practices.

But all of this will come at a price for consumers. The damage is so significant, so widespread, the volume of claims is expected to raise insurance rates and premiums on businesses still suffering under the pandemic, costs that will be passed on to customers.

In a statement, the states department of insurance tells the NBCLA I-Team, “insurance companies could treat these as catastrophic losses …averaged over a longer period of time which could temper rate increases in the short term.”

The department says it will be evaluating any requests to increase rates or premiums by insurers and for businesses with no insurance.

"I would expect they would go to FEMA and possibly the SBA for help and that’s a situation that happens after every catastrophe," Ruiz said.

Community chipping in to clean up typically happens after every catastrophe too, Negrete said.

She says she will try to hold the line on costs for her customers, mostly kids and school districts. She wants to keep the music playing, and she’s just tired of the blues.

"There’s moments where I just feel a wave of being knocked down and knocked down and knocked down, and there’s moment where I see the community come together," she said. "This is a deeper, more serious cause and unfortunately it’s been overshadowed by this, opportunistic people."

The insurance industry has tracked losses and claims for the top 10 incidents of civil unrest in our nations history. LA holds the top two positions for losses -- the 1992 Riots, and the Watts Riots of 1965 -- as being the most-costly in U.S. History.