Shop Destroyed in a Riot? Standard Fire Insurance Pays ₹0 Unless You Check This 'RSMD' Clause

🔥 The "Mob Violence" Gap

A political protest turns violent near your market. A mob forces open your shutters, loots your stock, and sets your shop on fire. You are devastated, but you console yourself, "At least I have Fire Insurance."

The Shock: The insurer investigates and declares the event an "Act of Terrorism" or cites a specific exclusion. If your policy does not explicitly cover RSMD (Riots, Strikes, Malicious Damage) AND Terrorism, you get paid ₹0.

Shop Destroyed in a Riot?

In India, the "Standard Fire and Special Perils Policy" (SFSP) is the baseline commercial cover. While it typically includes RSMD, many low-cost policies or standalone "Burglary" policies exclude it to save on premiums.

Crucially, Terrorism Cover is almost ALWAYS an optional add-on managed by the Indian Terrorism Pool. The line between a "Riot" and "Terrorism" is decided by the government authorities, not by you or your insurer.

RSMD vs. Terrorism

If you do not have the specific "Terrorism" extension, you are exposing your livelihood to massive risk. Here is how they differ legally:

Event Type	Definition	Covered by Standard Policy?
RSMD (Riots/Strikes)	Violent acts by a group of people (e.g., political agitation, labor union strike).	Yes (Usually built-in, but verify)
Terrorism	Acts committed to threaten the unity, integrity, or security of India (e.g., Bomb blast, Armed attack).	NO (Requires Specific Add-on)

The Trap: If a violent event is officially classified as a "Terror Attack" by the Ministry of Home Affairs, and you only possess RSMD cover, your claim will be rejected instantly.

Burglary Policy vs. Looting

Another fatal error is relying on a standard "Burglary Insurance" policy to cover losses from a riot.

⚠️ The "Violent Entry" Clause:

• Burglary Insurance: Legally requires proof of "Forcible and Violent Entry" (e.g., broken locks, smashed windows) by thieves working in secrecy.
• Looting (during Riot): Often occurs when the shop is open or when a mob overpowers staff without necessarily "breaking in" secretly.

If your shop is looted during a riot, a standard Burglary policy may deny the claim stating "This was Looting during a disturbance, not Burglary." You need the RSMD cover in your Fire Policy to effectively claim for stock lost during mob violence.

Chief Editor’s Verdict

Review your policy schedule immediately. Look specifically under the "Add-ons" or "Extensions" section.

If you do not see the words "Terrorism Damage Cover", contact your agent immediately. It usually costs a tiny fraction of the premium (often paise per ₹1,000 sum assured) but provides the ultimate safety net for your business assets.

⚖️ Legal Disclaimer:
The information provided in this article is for educational purposes only and does not constitute insurance or legal advice. Insurance is the subject matter of solicitation. The "Standard Fire and Special Perils" (SFSP) policy terms are governed by IRDAI regulations. Terrorism coverage is subject to the terms of the Indian Terrorism Risk Insurance Pool. Always read your Policy Wordings carefully to understand specific exclusions regarding civil commotion and war-like situations.