Insurance coverage at risk for Los Angeles property owners if Insurrection Act is invoked

By Mia MacGregor

June 11 - (The Insurer) - Los Angeles residents facing property damage from ongoing protests in the city could face significant insurance coverage gaps if U.S. President Donald Trump decided to invoke the Insurrection Act, Tarique Nageer, Marsh's property terrorism and political violence leader, told The Insurer.

The Insurrection Act, outlined in Title 10, Sections 251-255 of the United States Code, grants the U.S. president authority to use military forces to suppress insurrections, domestic violence or unlawful activities obstructing law enforcement.

Trump on Tuesday said he would invoke the Insurrection Act if he determined there was an insurrection under way as part of street protests in Los Angeles, which began last week after reports that Immigration and Customs Enforcement (ICE) officers were conducting raids throughout the city.

Nageer explained the potential insurance implications for policyholders, noting that political violence perils such as insurrection are typically excluded from standard property and standalone terrorism insurance policies.

While additional coverage can be obtained, most standard policies exclude insurrection. "If the Insurrection Act is invoked, clients may find themselves devoid of coverage," he stated.

Nageer further explained that insurers could interpret the invocation of the Insurrection Act as a directive from the president, which may lead to exclusions in insurance policies.

"Depending on insurers' interpretations and flexibility, clients could theoretically face problematic situations, because many of them do not purchase political violence insurance for U.S. assets."

The growing frequency and severity of civil unrest events in the U.S. have led to substantial financial losses, highlighting civil unrest as a key risk consideration for the insurance and reinsurance industry.

The 1992 Los Angeles riots resulted in approximately $775 million in insured losses. In comparison, the civil unrest following George Floyd's death in 2020 led to an estimated $2 billion in insured losses.