This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Businesses Should File Hurricane Sandy Insurance Claims

NEW YORK ( TheStreet) -- It's been over two weeks since Hurricane Sandy pummeled her way ashore in New York and New Jersey. For small businesses in the path of destruction, days of closed business as well as large cleanup and restoration efforts mean lost sales and high additional expenses.

It's not surprising when experts say a quarter of all small businesses don't reopen after a disaster happens. But there are ways to mitigate losses by having a business continuity plan ready to go and appropriate insurance provisions already in place.

Michael LoGiudice, managing director of insurance and litigation support at CBIZ's (CBZ - Get Report) Valuation Group and a forensic accountant, has spent an extended time helping companies assess damages after Hurricane Katrina.

If you haven't filed a claim already, LoGiudice, who has expertise in the valuation of business-interruption insurance claims resulting from flood, wind or storm surge damage, says it's not too late to do so, but there are steps that small-business owners should take immediately if they plan to file a claim.

Two types of coverage important for all businesses include business-income (or business-interruption) coverage and extra-expense policies. The former covers the loss of income during restoration and repairs. The latter is for added expenses incurred to keep your business running.

Here's what you need to know about filing insurance claims.

1. Contact your insurance company

It might seem obvious, but before you start pumping out water, get in touch with your insurance company. "When the disaster strikes, the most critical thing is to put your insurance company on notice that you've got a claim. It's important to do that right away. Either your broker or your agent will then notify you and retain the services of an adjuster," LoGiudice says.

The sooner you contact the insurance company, the sooner claims can begin to get processed. "Sometimes these claims take as long as nine months to a year to settle," he says.

2. Keep bills and expenses separate.

This includes any bills from demolition and repair work as well as expenses incurred as a result of temporarily changing your business model to keep customers. "Keep that separate because you might be able to claim for these costs," he says.

For example, during Hurricane Katrina, area hotels weren't able to open because they couldn't get clean linens. Some ended up loading semi-tractor trailers and trucking dirty linens 150 miles to get them cleaned and trucked back, LoGiudice says.

"That's a completely extraordinary expense that you would never do in normal course of business, but it's the type of thing that an extra expense pays you for," he says.

3. Don't try to guess damages.

An adjuster is tasked with giving the insurance company an estimate of how much the damage totals, but you may also want to hire your own expert to assess damages.

LoGiudice also suggests having vendor agreements in place within the business-continuity plan for things like demolition and restoration.

"The idea is that if you set it up in advance you're going to a get a better price, the demo company knows you on the books and it gives you peace of mind to know exactly who to call" in case of disaster, he says.

If a business doesn't have that measure in its contingency measures, insurance agencies do have catastrophe-response teams ready and their own vendor agreements in place for demo and restoration work.

Additionally, if you have already spoken with, say, a contractor and have an estimate, make sure to tell your insurance company. Don't try to guess at damages because it will lock you into a number that could potentially be far too low, LoGiudice cautions.

4. Get money. Seriously.

"When you have a loss, you're entitled to the actual cash value as soon as it is agreed upon and measured," he says. "Set up a schedule that makes sense to you and the insurance company for interim partial payments."

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.

RELATED STORIES:







Follow TheStreet on Twitter and become a fan on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CBZ $9.12 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs