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Blog - Month: September 2024

What Business Insurance Policies Cover Rioting, Looting

Protests and mass demonstrations that can sometimes descend into rioting and civil unrest are becoming more common not just in the U.S., but all over the world. Businesses can sometimes unwittingly become collateral damage from vandalism and looting.

It doesn’t have to be a retail establishment; office buildings and other commercial properties can also face looting and damage during civil unrest. For business owners whose properties are damaged or destroyed, the ordeal can be both unsettling and stressful as they wrestle with the specifics of filing insurance claims.

Fortunately, you don’t need special insurance policies to cover these events. Your basic commercial property policy and commercial auto (if you have business vehicles that are damaged) will usually suffice.

Here’s a look at what your policies may cover and how to prepare for filing a claim if your business is damaged during rioting or civil unrest.

 

Property damage

Standard commercial property policies cover damage to a business property caused by fire, explosion, riot or civil commotion, vandalism or malicious mischief. This would include coverage to the structure, as well as any inventory, fixtures and other contents. Business owner’s policies also include this risk.

Damage payouts would be subject to sublimits (specific or blanket) for inventory, fixtures and other items, as well as the policy deductible.

 

Commercial vehicle damage

For business-owned vehicles to be covered for damage for these types of events, you’ll want to ensure that you have purchased comprehensive coverage, which is an optional, but highly recommended part of your policy.

Comprehensive coverage may cover a vehicle if it is:

  • Stolen,
  • Damaged, or
  • Destroyed.

 

One of the most common damages to vehicles during riots is broken windshields, which you can usually get covered with an optional glass coverage rider.

 

Business interruption coverage

Companies that are forced to close as a result of rioting and looting damage may have coverage for business interruption under a business property policy.

Business interruption insurance may cover lost income if a company is unable to operate after its premises were damaged during a riot or social unrest. Coverage may also apply if a business suffers a loss of income because of curfews or if authorities bar access to a property.

Coverage is typically triggered if there is direct physical damage to the premises.

 

Filing a claim

When filing a claim, read your policy or give us a call to determine how to best present it. It’s important to understand the policy’s limits and deductibles before spending time documenting losses that may not be covered.

If you are going to file a claim, document all damage. Keep receipts for all your inventory and fixtures.

In the event of a claim:

  • Take photos of all damage.
  • Contact your agent and file a claim immediately.
  • Clean up to protect your building, but do not make major repairs until you talk to the insurance company.
  • Keep receipts for any remediation work.

 

If you’re going to file a business interruption insurance claim, you will need:

  • Pre-riot financial statements and income tax returns.
  • Post-riot business records.
  • Copies of current utility bills, employee wage and benefit statements, and other records showing continuing operating expenses.
  • Receipts for building materials, a portable generator and other supplies needed for immediate repairs or remediation.
  • Paid invoices from contractors, security personnel, media outlets and other service providers.
  • Receipts for rental payments, if you move your business to a temporary location.

 

Note: Many policies require a 72-hour waiting period before a policyholder can begin making a business interruption claim. That’s because the first three days of business shutdown, access constraints or limited hours of operation because of a civil authority action, are often excluded from coverage.

There may also be a limit to the claim period. A standard limit is up to three weeks of losses.

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More Businesses Sued Over Disabled Website Access

Businesses with a web presence, particularly those that are consumer-facing, are increasingly being sued over website accessibility issues that prevent disabled individuals from using a website.

While the number of such cases has been growing, 2,281 website accessibility lawsuits were filed in 2023, down from 2,387 the prior year and 2,352 in 2021, according to a report by Accessibility.com, a firm that helps businesses make their websites useable for certain disabled individuals.

The drop in cases actually filed is due to more organizations settling with law firms without going to court, in light of the fact that there was an 18% year-on-year increase in demand notices in 2023, the report concludes.

For businesses with customer-facing websites, this is a new risk that must be taken seriously as people can access the websites from anywhere in the country. Just because a business is located in say, Kentucky, a person in New York may sue in their local jurisdiction over website access issues.

Even if a business succeeds in fighting one of these cases, the litigation costs can be substantial.

 

What is website accessibility?

Website accessibility refers to the extent to which a site can be used by individuals with disabilities. This can include people who are blind or have low vision, those who are deaf or hard of hearing, and people with mobility impairments, cognitive disabilities or other disabilities.

It involves designing your website so that its content is available to and functional for everyone, including those who might use assistive technologies like screen readers, voice recognition software, or specialized input devices.

 

What’s happening?

The Americans with Disabilities Act allows individuals with disabilities to bring lawsuits against businesses directly. A plaintiff can seek injunctive relief, such as asking for a court order requiring the website to be changed as well as attorneys’ fees or costs. However, the ADA does not permit the recovery of monetary damages in these cases.

That said, many states, including New York and California, have enacted state laws allowing individuals to recover monetary damages for disability discrimination. Courts in both states have ruled that websites are places of public accommodation akin to establishments with physical locations, and, thus, are subject to the ADA.

As a result, more than 85% of website accessibility lawsuits are filed in those two states, according to the Accessibility.com report.

There are indications that filing these types of lawsuits has become a moneymaker for a few law firms and individuals. The report found that:

  • New York had nearly 73% of all the cases filed nationwide, followed by California and Illinois.
  • Over 69% of all website accessibility lawsuits were filed by five law firms out of New York and California.
  • Almost 16% of website accessibility lawsuits in 2023 were filed by five plaintiffs. One of them filed more than 105 lawsuits that year after filing 108 in 2022. The report found that four other individuals filed between 52 and 78 cases apiece in 2023.

 

What should businesses do?

Most of these lawsuits cite the “Web Content Accessibility Guidelines,” published by the World Wide Web Consortium. While these guidelines are advisory only, they have become the standard to follow when making websites accessible to individuals with disabilities.

Courts have accepted these guidelines as the applicable standard for ADA website accessibility compliance. Many of these cases are settled with the condition that the website become compliant with WCAG, which is focused on making websites perceivable, operable, understandable and robust.

There are widgets that can be installed on websites to ensure they comply with the WCAG, but even so, 933 lawsuits filed in 2023 were against businesses that had installed such widgets on their websites.

Experts recommend:

  • Regularly checking your website and digital content to ensure it is accessible to individuals with disabilities.
  • Ensuring that your website complies with the latest WCAG guidelines and includes a general statement regarding accessibility and a clear indication of how to contact your company if an issue with accessibility arises.
  • If necessary, hire an outside vendor that can bring your website into compliance with the WCAG guidelines.
  • If you receive an ADA demand letter or complaint, you should consult with attorneys who are experienced in these types of cases.
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EEOC, OSHA Retaliation Claims Surge

Over the past several years, employers have seen a significant uptick in retaliation and whistleblower claims filed by employees and investigated by federal agencies.

Often these claims are part of another complaint, either concerning workplace discrimination or harassment issues and filed with the Equal Employment Opportunity Commission, or concerning workplace safety issues, which are filed with Fed-OSHA.

In 2023, the EEOC saw a record number of retaliation complaints — 46,047, up 20% from 2022. During that same period the number of cases that were resolved jumped 28% to 43,685 from 34,180.

Monetary benefit awards and settlements leapt nearly 30% to $283 million in 2023, from $220 million in 2022.

Importantly, the number of complaints filed with the EEOC that include retaliation increased to 50% of the total in 2022, from 30% in 2010.

At OSHA, the number of whistleblower complaints filed with the agency increased significantly in 2023, with the vast majority of those complaints — about seven in 10 — filed under the OSHA Act section on “retaliation based on protected safety acts,” like harassment or discrimination.

OSHA has put an emphasis on protecting workers who suffer retaliatory treatment after bringing up workplace safety issues with management. The number of retaliation case determinations by OSHA soared nearly 30% between fiscal year 2023 and FY2022.

 

What is retaliation?

Retaliation means any adverse action that management or supervisors take against an employee because they complained about harassment or discrimination or workplace safety issues. Any negative action that would deter a reasonable worker in the same situation from making a complaint also qualifies as retaliation.

Employees who participate in an investigation of any of these problems are also protected. For example, you cannot punish a worker for giving a statement to a government agency that is looking into a discrimination claim.

Employment law experts recommend that employers do the following:

 

Set clear and unambiguous policies

  • Your company policy should clearly state that retaliation is not permitted.
  • The policy should describe the parameters of inappropriate conduct as well as you can define them.
  • Put the policy in writing.
  • Set reporting and grievance procedures, including the person to whom the employee can report a retaliation complaint.
  • Have staff sign an acknowledgment of receipt of your policy.

 

Investigate complaints promptly

  • All complaints should be taken seriously and investigated without delay.
  • Anyone who participates in an investigation is protected from retaliation (not just the employee who makes a complaint, but witnesses as well).
  • Take effective remedial measures, including carefully reviewing all disciplinary measures before imposing them. You should also ensure that disciplinary actions are consistent with past practices.

 

Train managers and supervisors

Train managers and supervisors and ensure they understand your policies.

Make sure they understand who is protected from retaliation (participants, complainants — and even persons related to the complainant in some cases).

They should also understand what constitutes retaliatory conduct and, if they are unsure, they should speak to your human resources manager.

 

Further protection

Besides instituting policies and training managers and supervisors about avoiding retaliatory actions, it is important to have proper insurance coverage in place: employment practices liability insurance.

This insurance may cover the cost of employee-initiated lawsuits like discrimination, harassment and retaliation complaints, but it will not cover illegal acts. Covered costs include legal fees, as well as any settlements or judgments rendered against your business.

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Cal/OSHA Proposed Rules Would Impose Large Penalties for ‘Egregious,’ ‘Enterprise-Wide’ Violations

Cal/OSHA is working on new rules that would crack down and step up enforcement and penalties against California employers that commit “egregious” and “enterprise-wide” workplace safety violations.

The forthcoming rules would impose substantial penalties on companies that have shown a disregard towards California workplace safety regulations and the wellbeing of their employees. Employers that are cited for egregious violations could be fined up to $158,000 “per instance,” meaning it can be applied for each employee exposed to the violation. And there’s more.

Employers that are cited for egregious violations could be fined up to $158,000 “per instance,” meaning it can be applied for each employee exposed to the violation.

As well, businesses with multiple locations will have to be especially mindful of complying with Cal/OSHA regulations to ensure they are not snared for the same violations at two or more locations.

The new rules implement a 2021 law, SB 606, and will bring Cal/OSHA’s rules in line with Fed-OSHA’s as federal law requires that state-run OSHA enforcement programs to be “at least as effective” as the federal program.

Here’s what’s on tap:

Enterprise-wide violation

Under the proposed rules, a violation is enterprise-wide if an employer has multiple worksites and either of the following is true:

  • The employer has a written policy or procedure that violates occupational safety and health regulations; or
  • The Division of Occupational Safety and Health has evidence of a pattern or practice of the same violation or violations involving more than one of the employer’s worksites.

 

The proposed penalty for enterprise-wide violations is multiplied by the number of worksites covered at inspection, up to a maximum of $158,727 per exposed worker, and will be adjusted each year for inflation.

If an employer fails to abate violations noted by a Cal/OSHA inspector at any worksite covered by the citation in a timely manner, a separate “failure to abate” penalty of up to $15,000 may be assessed for each instance.

 

Egregious violation

The proposed rules define an egregious violation as a willful violation where the employer has had a previous egregious violation in the past five years. One or more of the following apply:

  • The employer, intentionally, through conscious, voluntary action or inaction, made no reasonable effort to eliminate the known violation.
  • The employer has a history of one or more serious, repeat or willful violations or more than 20 general or regulatory violations per 100 employees.
  • The employer intentionally disregarded its health and safety responsibilities, such as by failing to maintain an effective Injury and Illness Program, ignoring safety and health hazards, or refusing to comply with the Cal/OSHA Act.
  • The employer’s conduct, taken as a whole, amounts to clear bad faith in the performance of their duties to comply with occupational safety and health standards.
  • Within the five years preceding a citation for an egregious violation, the employer has committed more than five violations of any Title 8 standard that has become finalized.
  • The violations resulted in worker fatalities, a worksite catastrophe, or five or more injuries or illnesses. Catastrophe is defined as inpatient hospitalization of three or more workers from a workplace hazard.
  • Within the 12 months immediately preceding the underlying violation, 10% of all employees at the cited worksite sustained workplace injuries or illnesses.

 

According to the Cal-OSHA Reporter newsletter, it’s expected that the proposed maximum penalty for egregious violations will be $158,727, adjusted each year according to the consumer price index. Importantly, each employee that is exposed to an egregious violation would be considered a separate violation. Since the penalty can be assessed on a per-instance basis, it could quickly spiral for some employers.

 

The takeaway

The proposed regulations pose the largest risk for companies with multiple locations.

Employers should double down on their workplace safety efforts and ensure that there is buy-in to the program from top management down to supervisors and line workers at all locations.

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