Civil

Civil Unrest Since 2020: A Growing Risk That’s Reshaping Insurance

Since 2020, insurers have been forced to recalibrate how they think about “civil unrest” risk. What used to be treated as a low-frequency, localized exposure is now viewed more like a recurring peril—one that can materialize quickly, spread across multiple locations, and produce losses across many lines of insurance at once. Even when events are limited to a few city blocks, the ripple effects can be nationwide through supply chains, business interruption, litigation, reputational fallout, and reinsurance pricing.

This is no longer a theoretical concern. It’s a practical underwriting, claims, and capital-management problem that continues to evolve.

Why civil unrest matters more now than it used to

Civil unrest has always existed, but the post-2020 environment introduced conditions that make it more impactful for insurers:

1) Frequency and “multi-site” exposure
Insurers are built to handle storms, fires, and auto accidents—events that occur often, but with patterns they can model. Civil unrest is harder: it can flare up in many places in a short time, and the locations are not always predictable through traditional catastrophe modeling.

From a portfolio perspective, that matters. A carrier might not have a big concentration in any single neighborhood, but can still take meaningful losses if disturbances occur across numerous metros within the same policy period.

2) Losses hit multiple lines simultaneously
Civil unrest doesn’t confine itself to one coverage type. A single event can trigger claims under:

• Commercial property (fire, vandalism, broken glass, smoke damage)

• Business interruption and extra expense (closed streets, curfews, disrupted operations)

• Builders risk (construction sites are often exposed)

• Inland marine (equipment and inventory in transit)

• Auto (fleet vehicles, dealership inventories, personal autos)

• Liability (security incidents, third-party injuries, allegations of negligence)

• Workers’ compensation (employee injuries during events or clean-up)

When multiple lines light up at once, loss aggregation becomes a major concern—especially for carriers with large footprints in urban corridors.

3) Claims complexity and dispute potential
Compared to a hailstorm, civil unrest claims can be messier to adjust and more likely to involve disputes. Common friction points include:

• Causation questions: Was the damage from vandalism, fire, looting, or something else?

• Timing and proof issues: Video evidence, police reports, and documentation can be incomplete.

• Coverage interpretation: Differences between “riot,” “civil commotion,” “vandalism,” “terrorism,” and “war” exclusions can become contested.

• Business interruption triggers: Whether coverage requires direct physical loss, or whether closures due to civil authority orders qualify, varies by policy wording and state law.

More complexity typically means higher adjustment costs, longer claim cycles, and increased litigation exposure.

Why the risk appears to be growing

Insurers pay attention to whether a peril is becoming more likely, more severe, or both. Several trends have pushed civil unrest into the “growing risk” category:

A) Faster mobilization and wider exposure
Social media and always-on news cycles can accelerate gathering behavior and amplify events. From an insurance standpoint, speed matters: the window to protect property, secure perimeters, or reduce exposure is smaller than it used to be.

B) Economic pressure and social polarization
Periods of economic stress and heightened social tension have historically correlated with higher social instability. Insurers don’t underwrite politics—but they do underwrite the conditions that affect claim probability and severity.

C) Urban density and high-value concentration
Many insured assets are clustered in downtown and mixed-use corridors: restaurants, retail, multifamily buildings, small professional offices, and high-end auto inventories. Concentration increases the chances that a localized disturbance creates outsized insured loss.

D) Supply chain and continuity risk
Even if a business’s property is untouched, it may lose revenue from closures, blocked access, interrupted deliveries, or workforce disruption. This expands the financial footprint of events beyond the immediately affected area.

How insurers are responding

The insurance market’s response has been practical and, in many cases, visible to policyholders:

1) Underwriting and pricing adjustments
Carriers increasingly scrutinize:

• Location details (street-level exposure matters more than ZIP-level)

• Protective measures (shutters, alarms, security, lighting, monitored systems)

• Occupancy type (late-night retail, bars, and certain storefront businesses often face higher scrutiny)

• Prior loss history and risk management practices

This can translate into higher premiums, stricter underwriting guidelines, higher deductibles, or reduced limits for some risks.

2) Coverage wording changes and tighter sublimits
Some policies have introduced or emphasized:

• Sublimits for vandalism or civil commotion-related BI

• Revised definitions and triggers for civil authority coverage

• Higher deductibles for certain damage types (e.g., glass, vandalism)

• More explicit exclusions or conditions
  
  

3) Reinsurance pressure
Primary insurers rely on reinsurance to protect their balance sheets from large or clustered losses. When reinsurers view civil unrest as more frequent and harder to model, they often respond with higher rates, tighter terms, and higher attachment points. That cost eventually flows back into the retail market.

4) Greater emphasis on mitigation
Insurers and brokers are increasingly encouraging practical steps:

• Pre-event plans (who boards up, who moves inventory, who contacts security)

• Updated camera coverage and documentation practices

• Improved exterior lighting and physical barriers

• Inventory and cash-handling changes during high-risk periods

These steps don’t eliminate risk, but they can reduce severity and make claims easier to resolve.

What policyholders can do right now

For businesses and property owners, the most useful response is not panic—it’s preparation and clarity:

• Review your policy wording: Know what triggers business interruption, civil authority, and extra expense.

• Document inventory and property condition: Photos, serial numbers, and updated valuations help claims move faster.

• Ask about deductibles and sublimits: Especially for vandalism, glass, and BI-related coverages.

• Create a response plan: Board-up vendors, key contacts, off-site backups, and employee safety protocols.

• Consider layered risk management: Physical security + procedures + insurance is far more effective than any one piece alone.

The bottom line

Civil unrest since 2020 has become a persistent, complex exposure—less predictable than traditional catastrophes, and capable of generating multi-line losses, litigation, and business interruption at scale. For insurers, that means more sophisticated location-level underwriting, tighter terms, and increased reliance on risk mitigation. For policyholders, it means the best outcomes come from understanding coverage triggers, maintaining strong documentation, and building a practical plan to reduce severity if events occur.