Workers began to board up a display window at the Louis Vuitton store Aug. 10 after overnight vandals hit many high-end retailers in Chicago.
Photo: Teresa Crawford/Associated PressAs smaller restaurants and shops in Chicago try to rebuild after a resurgence in looting this month, they face another potential setback: delays from the rush of insurance claims and the prospect of much higher premiums next year.
Some owners say they have yet to receive insurance payouts 2½ months after the late May and early June riots, which is preventing them from reopening.
Earlier this month, looters struck the Magnificent Mile, an upscale strip on Michigan Avenue. They broke into stores run by LVMH Moet Hennessy Louis Vuitton SE, Apple Inc. and Best Buy Co., among others. More than 100 arrests were made.
Syd Jerome, a menswear store in downtown Chicago that was looted for the third time since May, highlights the dilemma retailers face when deciding whether to make an insurance claim.
Owner Scott Shapiro estimated that his latest losses from broken windows and stolen items, including belts, sunglasses and outerwear, totaled $40,000. But the family-owned business, which was also robbed in December, didn’t make insurance claims for damages sustained in May and June out of concern these claims could negatively affect its status with its insurer.
Volunteers helped clean up the parking lot outside a Best Buy store on Aug. 10 after vandals struck overnight in the Lincoln Park neighborhood of Chicago.
Photo: Charles Rex Arbogast/Associated Press“The insurance wasn’t intended to cover looting on a monthly basis. As merchants and taxpayers, we expect a semblance of protection from the local government,” said Mr. Shapiro, who is considering making claims this time.
Insurers say while premiums are affected by losses, other factors will also have an impact on the cost of insurance. These firms consult historical data to calculate how much is needed to cover further losses, said David Sampson, president and chief executive officer of the American Property Casualty Insurance Association.
“Because insurers look at many years of data, insurance costs are more reflective of long-term trends than one or two isolated events,” said Mr. Sampson.
That brings little comfort to smaller businesses, which fear unrest could occur again and that insurers would view them as high-risk and loss-making clients. Insurers may prefer to insure the bigger, national businesses that have a more geographically diverse footprint.
“If they are smaller, independent businesses, they are going to suffer with limited access and increased prices for coverage,” said David Macknin, an insurance consultant based in Chicago.
Smaller businesses have fewer resources and may also face more delays on insurance payouts, leaving stores boarded up for longer periods of time, he said.
Store owners say numerous setbacks during the past five months have curtailed foot traffic. Many are reconsidering their presence in parts of Chicago, like stretches of Michigan Avenue and the Loop, that have been targeted by looters.
Others said their business relationships with their insurers have become more fraught. Michelle Rothschild, who owns six liquor stores in the south and west side of Chicago, said five of her stores were looted and damaged in May. Four of them were completely gutted, with wiring pulled out, coolers broken and all inventory stolen.
Ms. Rothschild said that only two of the six stores are currently open. She has received a $20,000 check for inventory loss for one store, which she said is a fraction of the value of the shop’s merchandise. The owner said she has become frustrated at the numerous approvals the insurance company has to provide before she can get quotes for repairing her stores.
“When we need them, they are not expeditiously helping,” said Ms. Rothschild, the third-generation owner of the family business that her grandfather started.
At least 30 businesses in Chicago, mainly restaurants and bars, are also in legal battles with their insurers, asserting that insurers should pay for losses linked to shutdown orders because of Covid-19, according to court documents.
But as with cases in other U.S. cities, insurers say their policies exclude claims tied to the coronavirus.
Write to Esther Fung at esther.fung@wsj.com
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