Why Insurance Doesn’t Protect Small Businesses From Looting
Between Covid, protests, curfews, and looting, some businesses have racked up big losses. And their insurance may not cover them.
On the evening of May 30, amid protests over the death of George Floyd, 15 people, armed with hammers and bricks, broke into California Street Cannabis, a pot dispensary in San Francisco’s Nob Hill. They smashed the windows and countertops and cleaned out the store, carting away around $10,000 of product. For founder Drakari Donaldson, a 24-year-old Black Mexican American, it was devastating. His business was only five months old, and the Covid-19 lockdown had put a dampener on a jam-packed calendar of education and community initiatives he had planned for the shop’s debut, in the hope of reducing the lingering stigmas surrounding cannabis use.
The day after the looting, Donaldson and his team barricaded the dispensary windows with scrap metal and boards and opened back up since medical marijuana is considered an essential business. The boards are still up due to a citywide shortage of window repair. “I’m waiting to hear back about what the insurance will cover,” he says. He’s hopeful they’ll be covered, but he doesn’t know for sure.
After months of pandemic-induced upheaval, small retailers, in particular, have been decimated. First came the drop in revenue caused by lockdowns and supply chain shortages and then for some, the losses due to curfews, protests, and looting. There’s no firm number of just how costly these break-ins were. However, Property Claim Services, an insurance-industry data monitor that specializes in catastrophes, estimates the total cost for Minnesota insurers is a minimum of $25 million. When it comes to Covid, the American Property Casualty Insurance Association estimates the income loss for small U.S. businesses to be around $255 billion to $431 billion per month. Many small businesses don’t have any insurance since only workers’ compensation, unemployment, and disability insurance are required by federal guidelines, though states and landlords have their own rules. Even for those that do, it turns out coverage for looting isn’t guaranteed.