Until the 1960s -- financial liability for violent riots were defined by Sovereign Immunity laws which are part of Eminent Domain regulations . Some states/cities had Sovereign immunity laws related to cities being financially liable for riot damage; others did not. There are also state/city riot act statues which define financial liability for violent riots that are not controlled by a city. In the late 60s and early 70s there were debates on both sides of this issue; some advocates demanding financially liability laws be instituted everywhere and others demanding the existing laws be discontinued. Many states/cities in the 1960s eliminated laws holding cities financially responsible for violent riot damage because they were scared of the possible huge financial cost for the race riots in the 60s/70s.
As of 1968 15 states still had laws holding cities financially liable for violent riot damage.
Municipal Liability for Riot Damage
https://www.jstor.org/stable/1339512?seq=1
Legal paper about the issue from the earlier 1970s.
Municipal Liability For Riot Damage Under Eminent Domain
https://scholarlycommons.law.wlu.ed....com/&httpsredir=1&article=3209&context=wlulr
Some cities and states still have riot act statutes -- and lawsuits are being filed from business owners to hold cities liable for recent riots.
Baltimore businesses destroyed during riots sue city officials for failing to prevent violence
Jun 21, 2017
https://www.baltimoresun.com/news/crime/bs-md-ci-rioting-lawsuit-20170621-story.html
Dozens of Baltimore business owners are suing city officials, including the police department and former Mayor Stephanie Rawlings-Blake, saying they mishandled the city's response to the rioting in 2015.
In a nearly 700-page complaint filed in federal court this week, more than 60 plaintiffs say city officials failed to prevent the looting and rioting that erupted after the arrest and death of Freddie Gray in April 2015, despite warnings the city would experience violence.
More than 380 businesses, including many located south of North Avenue in West Baltimore, were damaged or destroyed. Property losses were estimated at nearly $13 million.
The plaintiffs are suing under the Maryland riot act statute, which allows parties to bring a claim against the city for property damage during civil unrest. They name Rawlings-Blake and former Police Commissioner Anthony Batts, who were in office at the time of the riots, current Mayor Catherine Pugh, the City Council, city police and the state as defendants. They are seeking an unspecified amount in damages.
(More at above url)