Charlottesville: Could an Insurance Loophole Have Averted the Tragedy?
This is part II of a series on the Charlottesville riots. See part I: When the Confederacy is a Liability
When protestors and riot police fill the streets in the heart of an American city, it's a good bet that not many people are thinking about insurance. But policies can make a difference. In fact, it's possible that the recent deadly riots in Charlottesville could have been prevented if officials had paid closer attention to the rally organizer's insurance policy.
Many towns and cities - including Charlottesville - require that "special event" organizers carry insurance. White nationalist Jason Kessler, who organized the "Unite the Right" rally in Charlottesville that ended in bloodshed and death, had taken out a $2 million policy to cover the demonstration, but the insurance company cancelled the policy almost two weeks before the demonstration once the company discovered the scope and reasons for the event.
City officials could have banned the event as a result, but they didn't. It appears the insurance cancellation simply slipped through the bureaucratic cracks.
Counter-protestor Heather Heyer was killed and many others severely injured when a white supremacist sympathizer drove a car into the crowd protesting the white nationalist rally. These losses cannot be quantified, and city business owners, which suffered monetary losses, say the city could have averted the tragedy.
Restaurants, bars, bookstores and boutiques downtown collectively lost at least $100,000 in business as a result of the rioting, according to Mike Rodi, a Charlottesville business owner who led an effort to stop the demonstration more than a month before it was scheduled. Rodi, who owns Rapture, a popular downtown nightspot, says his business lost $4,000 the day a KKK rally was held in July a few blocks away. He estimates that his restaurant lost $9,000 in business on Aug. 12 at the height of the summer season, when the larger demonstration occurred.
"For the August rally we had a network of people updating each other in real time and pretty much everyone on that thread by late afternoon closed their doors for the day," says Rodi. "I'd say you're looking at close to 100 percent revenue loss for most businesses Aug. 12. The Saturday before I made $9,000. The Saturday of the rally I didn't make any."
Average losses have been pegged at $2,000 per business downtown, where there are at least 50 stores and restaurants. Insurance won't cover these lost revenues because most business owners shut their doors voluntarily out of concern for employees' safety, Rodi says.
"The August rally, most of the downtown businesses ended up closed," he says. "Some went into wait-and-see mode, but almost every retailer and restaurant closed for the day or closed early."
Downtown merchants say they have no recourse for recovering the estimated $100,000 lost that day to a demonstration that they say should have - and legally could have - been prohibited. Neither the city nor any downtown merchants carry insurance coverage to protect against riots or acts of terrorism, possibly because the events of Aug. 12 were unprecedented in Charlottesville, according to Rodi.
The insurance connection
An open question is whether Charlottesville could have cited the rally organizer's lack of insurance to deny white nationalist marchers a permit.
The city's Standard Operating Procedures, in effect since 2009, state under section 3.5.4 that the sponsor of a demonstration or special event agrees to hold Charlottesville harmless for any liability resulting from the activity. City regulations also require sponsors to provide proof of insurance for a "special event" permit, and Kessler's insurance for the rally was canceled two weeks before the event.
Other rules allow the city to deny a permit outright if there is reasonable expectation of danger to public safety or property. In the days leading up to the perfect storm of Aug. 12, Rodi and dozens of other downtown merchants hired a lawyer to draft a letter to city officials, citing web links to hate-group organizations promising to bring trouble. Online message boards were on fire with promises of violence in the days before the rally. Rodi says anyone with any sense would have realized the day would not end well.
But through the years the city had been slack about upholding permit regulations to the letter of the law, "so there's a loophole that says you don't necessarily need a permit or insurance for a political protest," Rodi says.
Repeated attempts to get an explanation from the city attorney's office have gone unanswered.
If the city of Charlottesville could have somehow canceled the protests over a lack of insurance, the terrible events that unfolded might have been avoided. Perhaps in some other city in the future, a different approach to insurance could turn out to be a real life saver.
Steve Evans is the former managing editor of the Central Virginia Media Group. His stories on business and personal finance have been carried by Benzinga, Yahoo Finance, MSN Money, Narrative and many other outlets.
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