It is now almost three years since some of the most serious riots during the last stages of the Suharto administration. An initial problem when the riots erupted was the absence of insurance cover for riot losses by many of the businesses affected. In addition, businesses which were covered for riots, had obtained this protection by way of a special endorsement that only operated as long as the losses did not emanate from politically motivated events. This of course is understandable where the original intention of the parties might have been different to the words actually used to describe the cover.
Precise definitions are therefore important in preventing such disputes.
The parties need to make all relevant distinctions and be clear as to what their contracts are designed to cover. There may be a fine line between a covered event and one which is not covered or specifically excluded. From the outset, there appeared inconsistencies in approach. Had they been, parties might have realised that terms which afforded cover in insurance contracts sometimes varied slightly in the reinsurance contracts, thus affording no cover. Also, different applicable laws meant different results in otherwise similar cases.