Restaurants learn to plan for disaster
When Hurricane Sandy arrived in October 2012, Ian MacGregor, CEO of The Lobster Place, knew business wouldn’t be good. “We expected it to be disruptive, but no one expected that level of devastation,” said the owner of the supply company. The Lobster Place has the largest seafood market in the Northeast at its New York storefront at Chelsea Market, as well as a warehouse 12 miles away that supplies seafood to hundreds of metropolitan area restaurants, hotels and caterers.
Though the hurricane and flooding did not hit either business directly, it caused up to five days’ worth of power outages that resulted in the loss of USD 100,000 (EUR 72,539) of perishable inventory and another USD 150,000 (EUR 10,881) in lost business.
At the time he assumed most of those losses would be covered by the business-interruption insurance policy he’d taken out with Guard Insurance Group. “If you have a business-interruption insurance policy and your businesses are not in a flood zone, you assume your insurance will cover it,” he said.
MacGregor had a standard property casualty liability insurance policy with provisions for food storage and property loss. His landlord had not required him to carry flood insurance, “but you’d assume if your lights go off due to flooding anywhere, you’d be covered by your insurance,” he says. “That wasn’t the case — we weren’t covered at all.”
The insurance policy’s conditions for what would be covered in a power outage precluded an outage caused by a flood at an electricity station 5 miles away.