Insurance Companies Like the Word “Insurrection”

I wrote recently about why the wordsmith in me has been concerned at how much history we’ve thrown out by seizing upon “insurrection” — a term that’s accurate but incomplete — to describe last month’s violent attack on the U.S. Capitol, fomented by the outgoing president. Now the lawyer in me has started to worry, too.

Here’s why: The Jan. 6 assault damaged only federal property. But if instead the riot had spilled onto private property, then our choice to call what happened an insurrection would mean that the insurer doesn’t have to pay. That’s because damage caused by war, rebellions and, yes, insurrection is typically excluded from coverage under a property and casualty policy. The problem is actually a far larger one, sparked by the fact that there’s no clear agreement, even in the law, on what exactly constitutes an insurrection. And that lack of clarity has implications for all demonstrations that turn violent.

Oh, there are definitions. Reams of definitions. To the editors of the Oxford English Dictionary, an insurrection is “rising in arms or open resistance against established authority or governmental restraint.” To Merriam-Webster’s crew, it’s “an act or instance of revolting against civil authority or an established government.” 

What such definitions as these have in common is that they’re broad enough to cover many of the events of last summer, when some of the protests against the killing of George Floyd by the Minneapolis police spun out of control. At the time, activists met criticism with the argument that harm to property wasn’t a big deal because it was all insured. But that proposition is at best murky.

No, this isn’t whataboutism (yes, I hate that term) and I’m certainly not defending former President Donald Trump, who whether or not he technically “incited” the crowd that stormed the Capitol must take the lion’s share of the blame, given that he spent eight weeks whipping his supporters into a frenzy.

What I’m suggesting, rather, is that the use of the term “insurrection” might have serious consequences for other people — in particular, for those who found their property damaged, and sometimes burned to the ground, during last year’s disturbances. No, not all riots are insurrections, but the declaration of an “autonomous zone” would certainly fit the definition, as would attacks on law and order generally.

Even if they’re unlikely to succeed.

Among the leading cases on the issue is Home Insurance Company of New York v. Davila, decided by a federal appellate court in 1954. The case arose from an armed uprising in Puerto Rico led by the radical elements of the Nationalist Party. Insurers denied coverage for damage to private property on the ground that the harm was caused by an insurrection. The plaintiff sued and the insurers were ordered to pay. The Court of Appeals reversed, holding that the trial judge had defined insurrection too narrowly:

An insurrection aimed to accomplish the overthrow of the constituted government is no less an insurrection because the chances of success are forlorn. It is no less an insurrection because after it was suppressed twelve reasonable men on a jury might conclude that the uprising was foredoomed to failure from the start.

This language is plainly broad enough to include what happened at the Capitol last month. But the opinion also includes language that helps explain why last year’s autonomous zones might fall within the definition of insurrection: that the protesters want not just to overthrow the regime but also “to take possession of the inherent powers” of government.

The broadening of the definition meant that in the future, it would be easier for the defendant insurers to refuse to reimburse damages. Sure enough, after the Watts riots of 1965, insurers of burned-out homes and businesses refused to pay, precisely on the ground that the damage resulted from an insurrection. (Later, under pressure, many claims were paid, but even before the far-more-widespread 1968 riots, the insurers had responded by withdrawing from inner cities.)

In recent decades, some have argued for a narrower definition. An essay published in the Insurance Journal last June asked whether Trump’s threat to invoke the Insurrection Act — if carried out — would trigger the insurrection exclusions for businesses damaged during the protests. The author thought not.

A piece published around the same time at Law360 took the opposite tack, suggesting that the insurrection limitation might well lead to the denial or at least the contestation of a large number of claims — whether or not the Insurrection Act was invoked.

Indeed, in the well-known 1996 case of Younis Brothers & Co. v. Cigna Worldwide Insurance, a federal appellate court held that the burning and looting of insured commercial premises in Liberia was not covered, because “a state of insurrection existed in Liberia during the relevant time period” and it was that state of insurrection that caused the losses.

The fine legal distinctions involved are not mere logic-chopping. To property owners who suffer losses, they’re of enormous moment. The 1992 riots in Los Angeles after the beating of Rodney King led to an inflation-adjusted $1.4 billion in insurance payouts.

For one city.

In September 2020, Property Claim Services estimated the likely paid losses due to the disturbances following Floyd’s killing at $2 billion “and possibly more.” And that’s counting just the payouts — not the claims that are denied.

Denied, for example, on the ground that the damage stemmed from insurrection.

Perhaps the insurance industry will choose not to avail itself of this defense. That’s a political question, not a legal one. My concern here is that the choice of the word “insurrection” carries practical consequences well beyond what happens in the impeachment trial. Let’s not ignore them in the rush to find a simple, convenient word to describe Donald Trump’s frighteningly violent parting gift to the nation.

As it happens, the 1992 riots were also the last time a president invoked the Insurrection Act.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Stephen L. Carter is a Bloomberg Opinion columnist. He is a professor of law at Yale University and was a clerk to U.S. Supreme Court Justice Thurgood Marshall. His novels include “The Emperor of Ocean Park,” and his latest nonfiction book is “Invisible: The Forgotten Story of the Black Woman Lawyer Who Took Down America's Most Powerful Mobster.”

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