The Riot Strike Malicious Damage Insurance Cover | #LowYat_Riot-2015

In the aftermath of the riot and /or malicious damage occurrence at Low Yat Plaza on the 12th July 2015, the public was wondering what could have gone wrong – there were numerous versions as to what having caused such an untoward event to happen – perhaps it was the petty theft incidence or was it about the merchant having cheated the customer by selling a cloned phone for a genuine version, or this was triggered by a group of political trolls, maybe thugs?  Additional questions? Of course, we are looking at this from the insurance angle….

Was this event a riot to begin with?

Yes, naturally as the events unfolded, there was a riot, even if this happens over three different occasions.

Was this theft-related?

Accordingly to The Malaysian Insider at: (http://www.themalaysianinsider.com/malaysia/article/tensions-reignited-outside-low-yat-plaza-in-fresh-violence), the police (Kuala Lumpur CID chief Datuk Zainuddin Ahmad) had announced that the brawl last night was not racially motivated, but purely an act of revenge by a group of youths unhappy that one of their friends was arrested for allegedly stealing a mobile phone. So, this was one event driven by theft of a phone, the thief was caught and his friends came back with a vengeance, riot and maliciously damaging the property. – See more at: http://www.themalaysianinsider.com/malaysia/article/tensions-reignited-outside-low-yat-plaza-in-fresh-violence#sthash.4GrIVBxF.dpuf
You would probably ask, why the police report indicated a lenovo S860 was stolen whereas the attack was on the OPPO Store. As reported, the theft occurred at a store located at the higher floor and as the thief ran down, he stumbled and fell, and the OPPO staff caught him and handled him over to the security.

This then takes us to the particular paragraph (refer to the underlined sentence) in the ENDORSEMENT, “….but the Company shall not be liable under this extension for any loss or damage by fire or explosion nor for any loss or damage arising out of or in the course of burglary, housebreaking, theft or larceny or any attempt thereat or caused by any person taking part therein.”

“….but the Company shall not be liable under this extension for any loss or damage by fire or explosion nor for any loss or damage arising out of or in the course of burglary, housebreaking, theft or larceny or any attempt thereat or caused by any person taking part therein.”

“Since THEFT is an exclusion under this Endorsement cover, is this loss or damage arising from riot covered?”

Did this occur as a result of a customer deciding to take the law in his own hands by grabbing the new phone to substitute for the so-called cloned phone that he was sold earlier? This is something that we are not too concern at this point….anyway, this had been answered by the Police confirming that this was an outright theft.

The riot that occurred subsequently was an act of thuggery /gangsterism and certainly difficult for insurer to link directly or proximately to the initial theft incident, if we will to review this from the perspectives of mindset (“mens reas”) and action (“actus reus”) of those participants in crime…., where many of them were instigated and aroused for whatever the reason(s). The acts of thuggery and violence although initially were linked to theft had eventually culminated into something beyond the chain of causation tied proximately to theft.

Was this politically motivated?

If no, why is then this guy, Mohd. Ali Haji Baharom getting involved? We all know that he is very much linked to a particular political party….

Insurance Coverage – Areas of concern:

The following are some areas of concern (other than the issue of theft, which was discussed earlier), i.e., you may faced some exclusions and so on:
Condition 8
Unless otherwise expressly stated in the Policy this insurance does not cover:-
a) Goods held in trust or on commission.

This aspect is clear, unless the intention to cover had been clearly stated in the policy schedule.

Condition 6
This insurance does not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely:-
c) any act terrorism
Although this is an exclusion but it is extremely difficult for insurers to link this to terrorism —- terrorism is always linked to some form of unofficial or unauthorised use of violence and intimidation in the pursuit of political aims but in this case, other than “Ali” appearing from no-where and making a short speech along some racial lines, nothing actually points to terrorism….

 

 Your Commercial Fire Insurance Policy

ENDORSEMENT 12 | RIOT, STRIKE AND MALICIOUS DAMAGE

BASIC COMMERCIAL FIRE POLICY DOES NOT COVER LOSS OR DAMAGE ARISING FROM RIOT, STRIKE AND MALICIOUS DAMAGE —- YOU WOULD NEED TO EXTEND THIS AS PART OF YOUR BASIC POLICY

Endorsement Wording

In consideration of an additional premium, the Company hereby agree and declare that the insurance under {on item(s) having declared, of} this Policy shall extend to cover Riot and Strike Damage which for the purpose of this Endorsement shall mean (subject to the Special Conditions hereinafter contained):-Loss of or damage to property insured {under the item(s) hereinbefore referred to but none other} directly caused by:-

  1. The act of any person taking part together with others in any disturbance of the public peace (whether in connection with a strike or lock-out or not) not being an occurrence mentioned in Condition 6 of the Special Conditions hereof.
  2. The action of any lawfully constituted authority in suppressing or attempting to suppress any such disturbance or in minimizing the consequences of any such disturbance.
  3. The willful act of any striker or locked-out worker done in furtherance of a strike or in resistance to a lock-out.
  4. The action of any lawfully constituted authority in preventing or attempting to prevent any such act or in minimizing the consequences of any such act.

It is hereby declared further that notwithstanding anything in the within written Policy contained to the contrary, the insurance under this Policy shall extend to cover Malicious Damage which for the purpose of this extension shall mean:-

Loss of or damage to the property insured directly caused by the malicious act of any person (whether or not such act is committed in the course of a disturbance of the public peace) not being an act amounting to or committed in connection with an occurrence mentioned in Special Condition 6 of the Endorsement but the Company shall not be liable under this extension for any loss or damage by fire or explosion nor for any loss or damage arising out of or in the course of burglary, housebreaking, theft or larceny or any attempt thereat or caused by any person taking part therein.

SPECIAL CONDITIONS

For the purposes of this Endorsement but not otherwise there shall be substituted for the respectively numbered Conditions of the Policy the following:-

Condition 5

This insurance does not cover:-

  1. Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.
  2. Loss or damage resulting from total or partial cessation of work or the retarding or interruption or cessation of any process or operation.
  3. Loss or damage occasioned by permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority.
  4. Loss or damage occasioned by permanent or temporary dispossession of any building resulting from the unlawful occupation by any person of such building.

PROVIDED nevertheless that the Company is not relieved under (c) or (d) above of any liability to the Insured in respect of physical damage to the property insured occurring before dispossession or during temporary dispossession.

Condition 6

This insurance does not cover any loss or damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely:-

  1. War, invasion, act of foreign enemy, hostilities, or warlike operations (whether war be declared or not), civil war.
  2. Mutiny, civil commotion assuming the proportions of or amounting to a popular rising, military rising, insurrection, rebellion, revolution, military or usurped power.
  3. any act terrorism

For this purpose an act of terrorism means an act, including but not limited to the use of force or violence and/or the threat thereof, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purposes including the intention to influence any government and/or to put the public, or any section of the public in fear.

In any action, suit or other proceeding, where the Company alleges that by reason of the provisions of this Condition any loss or damage is not covered by this insurance, the burden of proving that such loss or damage is covered shall be upon the Insured.

Condition 8

Unless otherwise expressly stated in the Policy this insurance does not cover:-

  1. Goods held in trust or on commission.
  2. Bullion or unset precious stones.
  3. Any curiosity or work of art for an amount exceeding RM500.00.
  4. Manuscripts, plans, drawings or designs, patterns, models or moulds.
  5. Securities, obligations, or documents of any kind, stamps, coined or paper money, cheques, books or accounts or other business books, or computer systems records.
  6. Explosives.

Condition 11

This insurance may at any time be terminated by the Company on notice to that effect being given to the Insured, in which case the Company shall be liable to repay a rateable proportion of the premium for the unexpired term from the date of cancelment. If the insurance be terminated at the request of the Insured the Company shall not be liable to repay the premium or any part of it except in so far as the insurance applies to stocks in respect of which the Company shall retain a premium calculated according to its customary short period scale for the time the said insurance has been in force.

Condition 20

If the property hereby insured shall at the breaking out of any fire or at the commencement of any destruction of or damage to such property by any other peril insured against by this Endorsement be collectively of greater value than the sum insured thereon, then the Insured shall be considered as being his own insurer for the difference and shall bear a rateable share of the amount of the loss accordingly. Every item, if more than one, of the Policy shall be separately subject to this condition.

PROVIDED that it is hereby further expressly agreed and declared that:-

  1. All the Conditions of this Policy shall apply in all respects to the insurance granted by this extension save in so far as the same are expressly varied by the above Special Conditions and any reference to fire in the Conditions of the Policy shall be deemed to include the perils hereby insured against.
  2. The Special Conditions herein shall apply only to the insurance granted by this extension and the Conditions of the Policy shall apply in all respects to the insurance granted by the Policy as if this Endorsement had not been made thereon.

In summary this writeup is a simple summary of events and for analysing whether those wordings used within the policy extension clause will cause a problem for a successful claim against the policy.
What about matters concerning subrogation, where insurers having settled the claims file for recovery from those identified parties?

“It would be good to see insurers after settling the claims pursue subrogation to recover against those involved in creating such messy affairs and causing the public and traders in particular, so much agony!”

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2 comments for “The Riot Strike Malicious Damage Insurance Cover | #LowYat_Riot-2015

  1. Raymond Huang
    July 14, 2015 at 09:31

    Loss or damage caused to insured property by burglars arising out of and in the course of commissioning a theft or break-in will be covered by the theft policy. Damage subsequently done is the result of malicious damage or riot which should be covered under the fire policy under RSMD. This includes the damage done to the shop in the ‘revenge’ attack.

    • July 15, 2015 at 17:48

      Generally RSMD is extended to a basic commercial fire policy but there may be cases of policyholders saving on premium thus omitted this RSMD extension. It is good to revisit this if was previously omitted.

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