Why every small business now needs riot insurance

Cities and town have been rocked by protests and riots over two years, resulting in major property destruction and financial loss. Many businesses were not insured.

In an interview with the Star, William Kiama, manager of General Insurance Business at the Association of Kenya Insurers (AKI), discusses how businesses can protect themselves. He explains why insurance now is a necessity for every business, big or small.

Could your business survive a protest? How vulnerable are small businesses to unexpected disruptions such as protests, vandalism, theft, fire and floods?

These businesses are often in areas with high foot traffic as near public transport termini, residential areas and commercial centres with a concentration of shops without strong anti-theft deterrents, such as guards and alarms.

In many instances, a larger building housing separate businesses is secured, however, once that security is breached, there is a likelihood of widespread loss as witnessed in the recent past.

In other instances, businesses are in areas prone to flooding or are inaccessible in the event of fire or flooding. Hence, the chances of total loss are high.

What common risks are often overlooked?

Small businesses go to great lengths to protect themselves—installing CCTV, fitting grills on shop fronts, hiring security personnel—doing all they can to deter threats. But what happens when those precautions fail? Often, there’s no backup plan. That’s where insurance steps in as a safety net, enabling entrepreneurs to recover and rebuild when disaster strikes.

Risks such as fire, theft, floods, riots, malicious damage, employee injury or income loss during business interruption are frequently underestimated—yet they pose serious threats to a business’s survival. Many small enterprises are run solely by the owner, and if that individual is incapacitated, it could mean temporary closure or, worse, permanent shutdown.

A business can be crippled in case any of the above risks materialises.

Insurance isn’t just a policy, it’s a lifeline.

What kinds of insurance does a typical Kenyan SME need?

Depending on the nature of business, SMEs should consider the following covers:

Combined Business Insurance covers the stock, fixtures, furniture, cash registers and computers against fire, floods, burglary, riots and malicious damage.

Work Injury Benefits policy covers employees against injury and incapacitation, whether temporary or permanent. This is a legal requirement under the Work Injury Benefits Act.

Money Insurance covers theft or robbery of funds from the business or when in transit to the bank.

Fidelity Guarantee covers the business owner in the event of loss of money, equipment or goods belonging to the business from an act of dishonesty by employees.

Can small businesses get cover for looting or property damage during demos?  

Yes. This can be covered if a business had taken a Political Violence and Terrorism insurance cover. This ensures the business owner is compensated in case of break-in or fire resulting in loss of stock and property during a riot occasioned by political issues. It also covers the business owner in case of loss following a terrorist attack, such as the DusitD2 complex attack of January 2019.

Is business interruption cover available or practical for small enterprises?

Yes. Small businesses can insure against loss of income caused by disruptions. This type of cover is available, but it requires the business to already have fire insurance for its property (stock, fixtures). If a disruption occurs, simplified accounting is used to calculate the lost gross profit, which helps the business cover fixed expenses like rent and maintain profits during the downtime. The period of compensation is based on how long it would take to resume operations after repairs and claims on stocks, fixtures are settled under the fire cover.

Are affordable, flexible packages tailored for micro and small businesses?

Insurers offer packages or combined solutions providing a range of covers required by a small business. Some charge as little as Sh5,000 minimum premium per year or 12 months of cover.

What documents or information do small business owners need when applying for cover?

The main documents required are a completed proposal form, trading licence or certificate of incorporation/ID and PIN.

How does insured business successfully file a claim after loss or damage during unrest?

The business owner should promptly notify their insurance company. Most insurers provide clear guidance on the claims process that is outlined in policy documents and available on their website. After notification, the insured will be guided on how to complete and submit the claims form.

If the loss results from a riot or similar event, the business owner must first ensure their safety and that of their employees, then take reasonable steps to prevent further damage to insured property. The incident should be reported to the police, and the resulting police abstract should be submitted to the insurer along with the completed claim form.

Once the insurer receives the necessary documentation, they will assess the circumstances of the loss and the amount claimed, then provide a settlement offer.

What is the typical turnaround time for claim processing?

Within 14 days upon receipt of all claim’s documentation.

Where can owners go for help or advice in choosing the right cover?

Visit any insurance company or your preferred intermediary for information and advice. AKI also has a platform to help educate businesspeople on insurance covers that would work for them.