Insurance helps business recover, but pain remains

Chicago businesses, having sustained enormous damage from rioting since the weekend, are finding a lifeline in their insurance policies, provided they were fortunate enough to have one.

For the big-box stores and national chains, insurance to cover property damage, inventory loss and business interruptions are a standard part of operations. Experts said that most smaller merchants also carry coverage that will help them recover.

“I don’t think the situation will be as dire as some say it could be,” said Michael Schwartz, executive vice president of insurance adjustment firm L.J. Shaw & Co. in Lombard. He said the industry, following established practice for disasters, has been quickly handling claims under a triage system—assigning personal visits for the worst cases and helping merchants with board-up and salvage service, if needed. Simpler claims for a broken window might be handled remotely.

Schwartz said standard policies provide coverage for riots or civil disobedience. An online brokerage, Next Insurance, found in a survey of 44% of small businesses never have had coverage, but its results may have been skewed by responses from sole proprietors working from home.

The extent of the financial losses is unknown. Judy Frydland, commissioner of the city’s Buildings Department, said Monday that her agency has surveyed damage to 180 commercial properties as of early Sunday. In 50 cases, the department enlisted its own vendors to do board-up work.

She urged business owners to call 311 if they need help securing their properties. “We are not your obstacle but are here to partner with you,” Frydland said.

Many have drawn comparisons between the unrest and the 1968 riots that followed the assassination of Dr. Martin Luther King Jr. A study by the Insurance Information Institute found that, in 2020 dollars, the city’s 1968 riots produced $97 million in insurance claims, ranking it as the ninth most expensive episode of civil disorder in U.S. history.

The study found the most expensive, by far, were the 1992 riots in Los Angeles that followed the police beating of Rodney King. Those generated an estimated $1.4 billion in claims when adjusted for inflation.

Schwartz said that while he hasn’t been called to handle business related to the Chicago mayhem, another executive at his firm has gone to Minneapolis for claims from the demonstrations there. Minneapolis is where George Floyd died in police custody, prompting peaceful protests in cities nationwide but also looting and property damage.

The last time he’s seen a surge of claims from Chicago, Schwartz said, was the riots that accompanied the Chicago Bulls’ titles in the 1990s.

The financial cost of recovery, however, is just part of the challenge businesses face. For Sam Sanchez, owner of two River North restaurants that were ransacked late Saturday, he can’t shake the memory of what went beyond theft to wanton destruction.

Watching security video from his home, Sanchez saw people smash TVs and sound equipment with hammers, destroy furniture and steal artwork only to throw it in the street. He owns Moe’s Cantina and Old Crow Smokehouse in River North.

“There was a lot of hate there. I can’t figure it out,” he said. Sanchez said he has started his claims and estimates the damages at “easily over $100,000.”

The destruction came as he was planning to open for outdoor dining on Wednesday under the city’s planned relaxation of rules for COVID-19. That deadline may be deferred now, but Sanchez said it’ll take him at least 10 days to replace tempered glass and reopen if allowed.

“It’s just material stuff, and it’s hard to see the violation of your personal property. But this means your employees can’t work, and insurance doesn’t cover that,” he said.