Small business owners are finding their insurance policies have limits on the payouts for demolition of buildings torched in riots.
A report by the Minneapolis Star Tribune showed that most insurance payouts for demolition cover about $25,000 to $50,000 in costs. Meanwhile, contractors in the area have submitted bids ranging from $200,000 to $300,000 for the work.
Small business owners should check their policies for limits on demolition. Depending on the policy, insurance could pay from $25,000 up to $250,000.
Total damages for riots could exceed $2 billion, according to a Bloomberg News insurance analyst. In Minnesota alone, insurers expect gross losses of $254.6 million. In Minnesota, 1,612 claims have been received, but insurers expect that number to rise to at least 1,714.
According to the Star Tribune, it often costs more to demolish buildings than the property is actually worth.
After Minnesota’s riots, cities have hired demolition crews to take down structures that were dangerous, presenting the property owners with bills totaling hundreds of thousands of dollars to haul away debris.
With most major insurers suffering losses in the millions now and with more riots expected, commercial property insurance premiums are rising, sometimes doubling. In other areas, carriers won’t write policies at all.
