“...Usually a business has to pay a lot extra for that coverage as a rider, and I doubt that he did.”
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Perhaps he did...and perhaps he had it combined with “replacement cost coverage”. That would certainly explain his attitude.
If I was an insurance actuary, I would not offer that coverage to any "inner city" business at any price, precisely because of "moral hazard" risk, where the owner of a marginal business encourages rioters to torch his business.