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