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The rarely used and centuries-old Riot (Damages) Act of 1886 entitles claimants to compensation for damage and loss caused by riots. The recent case of Mitsui Sumitomo Insurance Co (Europe) Ltd & Ors v The Mayor’s Office for Policing and Crime [2013] considered how the old legislation can be applied to modern events.

London riots

During the riots that took place in London in August 2011, 25 youths smashed the windows of a warehouse insured by the claimants, looted the building and threw petrol bombs. The claimants claimed compensation for this damage from the police, using the provisions of the Riot (Damages) Act.

The Act obliges the police to compensate those who have suffered loss where a house, shop or building in a police authority’s area has been “injured or destroyed”, or the property in that building has been “injured, stolen or destroyed” by “persons riotously and tumultuously assembled together”.  Under Section 2 of the act, the amount of compensation payable is whatever amount the police feel is just.

The judge in the above case therefore had to consider the following:

  • Whether the losses from August 2011 fell within the definition of the Act;
  • Whether any consequential losses would be recoverable under the Act; and
  • Are future anticipated losses recoverable under the Act?

Property damage

The Mr Justice Flaux found that, because of the actions of the rioters and the extent of the riots, the losses very clearly fell within the definition of “property injured by persons riotously and tumultuously assembled together” and therefore the Act applied.

He then found on the second and third issues that the compensation payable was limited only to physical damage to the relevant property and did not extend to consequential or future anticipated losses (such as loss of profit or rent).

Association of British Insurers

Guidance for insurance companies does exist: the Association of British Insurers published guidance on riot claims compensation in August 2011. This deals with the way in which insurers should make such claims in the first instance and procedural points that need to be considered. This includes the timescales within which claims for compensation need to be submitted to the relevant police authority.

On 8 November 2013 (no doubt spurred on by the above case), the government announced a public consultation on reforming the Act. Their proposals include the reform of compensation for damage to property, establishing a scheme for compensation and setting up a riot claims bureau.

For more information on compensation for riot damage or any of the other issues raised in this article or on property insurance litigation matters in general, contact our Property Insurance Litigation team or tel: 0117 904 6000.