Riot damage losses not recoverable

Posted: 26th April 2016

RCJThe London riots of 2011 are now but a dim memory for most people, but this week a significant legal decision was reached by the Supreme Court which has significance for any business whose premises are subject to riot damage.

The case was fought by owners of properties which had been damaged by looters and then firebombed in the riots. Under such circumstances, the Riot (Damages) Act 1886 applies and renders the applicable Government (in this case the Mayor’s Office for Policing and Crime (MOPAC) liable to pay recompense to those affected.

The issue which led to the long-running legal battle was over whether the consequential losses suffered by the business such as loss of profits from trade and loss of rental income – also stood to be compensated by MOPAC.

The Supreme Court considered that the statute was clear and there was nothing in it to extend its scope to include compensation for consequential losses.

It is worth noting that the Riot Compensation Act 2016, which received the Royal Assent on 23 March 2016, specifically excludes compensation for almost all  consequential losses and also introduces a cap of £1 million on the compensation that can be paid in respect of any one claim.

The practical effect of the new legislation is that the price of insurance for such risks is likely to rise and cover may well be restricted.