News and Commentary

Business Owners Stunned To Learn Insurance Won’t Cover Demolition Costs Of Buildings Destroyed By BLM Rioters
A view outside a burned Walgreens store on May 30, 2020 in Minneapolis, Minnesota. Buildings and businesses around the Twin Cities have been looted and destroyed in the fallout after the death of George Floyd while in police custody.
Stephen Maturen/Getty Images

For months, Black Lives Matter activists and their media supporters have said that business owners who saw their livelihoods destroyed during riots shouldn’t worry because insurance would cover their losses. It turns out that won’t be the case, at least for business owners in Minneapolis and St. Paul, Minnesota.

The Star Tribune reported that a construction crew hired by the city of St. Paul to tear down the Sports Dome retail complex, which was destroyed by rioters, charged $140,000 for the demolition. The city sent the bill to the owners, which was for nearly six times the amount insurance would pay for demolition. Jay Kim, who owns the property, told the Tribune his insurance policy only covers up to $25,000 in demolition costs.

“We were really upset about that,” Kim said. “We thought that was high. But we didn’t know how much demolition would cost at the time.”

“Like dozens of other investors whose properties were severely damaged in the May riots, the Kim family was stunned to discover that the money it would collect from its insurance company for demolition won’t come close to the actual costs of doing the job. Most policies limit reimbursement to $25,000 to $50,000, but contractors have been submitting bids of $200,000 to $300,000. In many cases, the price of the work is not much lower than the actual value of the property, records show,” the Tribune reported.

Andrea Jenkins, vice president of the Minneapolis City Council, told the outlet she thinks the companies are engaging in “price-gouging” and that business owners “should contact the attorney general.”

“That is a symbol of capitalism run amok,” she added.

Jenkins previously supported abolishing the Minneapolis Police Department before violent crime increased in the city due to the riots.

Don Rachel, CEO of Rachel Contracting, told the Tribune that demolition for riot-related work is higher, but that’s because the government set regulations that require companies to treat all debris from burned-down buildings as hazardous. Rioters have been setting the buildings on fire.

“We aren’t taking advantage of anybody,” Rachel told the Tribune. “Some people might have sticker shock, but how do they know? Most of these folks have never had to wreck a building.”

More from the Tribune:

Demolition costs are so high that many rebuilding projects remain stuck in neutral, leaving large sections of Minneapolis and St. Paul with scorched buildings and piles of rubble that will linger for months.

“It’s been a big barrier to getting the street cleaned up,” said Allison Sharkey, executive director of the Lake Street Council. “I am becoming really concerned that people who want to reinvest won’t be able to.”

Some property owners are begging city officials to take the lead with contractors by combining their projects and seeking public bids for the work. They say that is the only way to make sure contractors don’t exploit inexperienced property owners, many of whom are immigrants and people of color.

As the outlet reported, St. Paul officials coordinated demolition work on several projects, including the Sports Dome owned by Kim, who also said he accepted the $140,000 demolition bill after other companies said they’d charge up to $285,000 for the same job.

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