Insurance Claims from the 10 January 2024 “Black Wednesday” Lootings and Damages in NCD and other centers across PNG

The 10 January 2024 “Black Wednesday” lootings and damages to businesses in NCD and some other urban centers of PNG has resulted in significant loses to not only businesses but to government entities as well.

Some businesses have already sought help from their insurers. Others have appealed for government support, and yet many more have endured their loses (emanating from this vandalism) and are rebuilding with their own means.

We at CJ Valuers Ltd - a registered tax-paying national SME have also endured significant financial loses. Our revenue stream was suffocated by the riots and the security concerns which restricted mobility for business operations, deployments of additional static security personnel at the office premises and selected other locations to protect vehicles and other company assets. Our revenue in January alone fell by 70% - the lowest in any month since the company started 3 years ago.

For an SME focused on the business of valuation of properties (residential, commercial, industrial), valuation of businesses (manufacturing, merchandising, services) valuation of securities (bonds, shares, derivatives), valuation of machineries and heavy equipment, and requires physical inspections of these assets as part of the business process, were significantly affected.

We are talking to our insurer to see if the insurance policy we have been paying for could help us recover. As a member of the POMCCI, we hope the efforts taken by POMCCI to discuss some form of support from the NCD and national governments.

For those M/SMEs who have insurance covers, you may wish to revisit your insurance policy to see which aspects are covered. To help understand some of the insurance issues relating to the 10 January 2024 civil unrest in NCD and most other part of PNG, here are some insurance coverage tips to consider.

Although this is generic, those of you who are policyholders are urged to read the terms of the policy purchased, as terms and definitions can vary from one policy to another.

For those M/SMEs with business or commercial insurance, note that standard commercial policies typically include coverage for physical loss or damage to the insured premises and other business property resulting from looting, vandalism, and riots of 10 January. Whether a specific loss will be covered depends on the actual language in your insurance policy and applicable exclusions.

You need to check your insurance policy first to ensure if the policy among other coverage/exclusions include:

• Vandalism, Malicious Mischief - Vandalism is wilful and malicious damage to, or destruction of, the policyholder’s property; malicious mischief is similar to vandalism and generally defined as the wilful destruction of property for vicious or mischievous purposes.
• Riot and Civil Commotion - Both a riot and a civil commotion involve a revolt by a gathering of people in a public place. A civil commotion is similar to a riot, but involves a greater number of people. Riot and civil commotion can be difficult to differentiate. Their perils are however often listed together in an insurance policy.
• Business Income Coverage - This coverage is for the loss of income sustained due to the necessary suspension of business operations during a period of restoration. The suspension of business operations typically must be caused by direct physical loss or damage to the policyholder’s premises resulting from a covered peril.
• Civil Authority Coverage - Business income insurance typically includes civil authority coverage, which provides loss of income due to prohibited access to the business premises by civil authority such as the security forces (police and army). Civil authority insurance covers income lost during a limited period of time. Businesses that were forced to limit hours or suspend operations due to rioting, vandalism, or civil commotion and have coverage for this particular loss of income may be covered after an initial waiting period.
• Glass Coverage - Many commercial policies cover glass breakage. However, some insurance companies require that glass coverage, such as plate glass insurance, be added to the standard policy by endorsement for an additional premium.

Besides business or commercial insurance, other coverages could include:

• Auto Insurance - Damage to vehicles because of riot or civil commotion is covered under the comprehensive portion of an automobile policy. This is an optional coverage, separate from collision coverage and from the mandated liability insurance under the relevant financial responsibility laws.
• Homeowners’ & Renters’ Insurance - Standard homeowners’ and renters’ policies will typically cover damage to the property including contents caused by a riot or civil commotion, vandalism, or malicious mischief. However, this coverage may be subject to exclusions such as vacancy of the property, usually over 60 days.

For those M/SMEs considering to submit claims, here are few tips for guidance purposes only (they are not a substitute for legal advice):

• Preservation of Property – Now that the situation has calmed and relatively safe, you may wish to take stock of what you did to secure the business against further loss during the mob looting period, such as boarding up shattered windows and securing assets. Expenditures made to secure property against further loss is typically covered by a commercial policy. You should contact your insurance company to determine whether such expenditures will be covered.?
• Report Claims Immediately - If you have sustained a loss due to the recent civil unrest, you should report damages immediately to your insurance agent/broker or insurance company. Generally, policies require that claims resulting from criminal behavior be reported promptly to law enforcement. Review and comply with any reporting deadlines required by your policy such as reporting theft or vandalism to the police within time periods specified in the policy.
• Track Expenses and Save Damaged Property - Track all the expenses you incur to preserve your property and complete emergency repairs. Save your damaged property so it can be inspected by your insurance adjuster. Take photos and video of the damaged property - particularly damaged property that is perishable and must be discarded.
• Document Communications with Insurance Agent, Adjusters, and Insurance Company - Log all your conversations with your adjuster about your claim and policy limitations in a "claim diary." If your adjuster says something is excluded, limited, or subject to certain conditions, ask the adjuster to point out the specific provision in your policy being cited.
• Grace Periods for Paying Premiums – M/SMEs affected by looting should contact your insurance companies about the grace periods and premium rebates that the Insurance Commissioner has ordered as a result of the 10 Jan chaos. Because of the Commissioner’s prior actions, businesses should be provided additional time to pay premiums and may qualify for lower premiums.
• Work with your insurance company, agent/broker, and/or claims adjuster to achieve a settlement that you believe is fair and consistent with your coverage.