Perishables in stores largely insured
Bloomberg News Service
NEW YORK — Mitch Cohen, who owns five Baskin-Robbins ice-cream shops on Long Island and in Manhattan, didn't sleep Thursday night when the power was off.
Associated Press
"I was just sick to my stomach at the possible loss of sales and what kind of insurance claims are we going to have to put in," said Cohen, 42, who owns a Baskin-Robbins in New York's Penn Station.
Food in the dairy section, left unrefrigerated in the blackout, was marked to be thrown out at a grocery store in New York yesterday. The blackout disrupted many businesses but did little damage to the nation's economy.
Cohen said yesterday that he lost up to 180 gallons of ice cream.
U.S. businesses that lost as much as $800 million worth of perishable items are the most likely to recoup insurance for the biggest North American blackout, attorneys said.
Supermarkets, restaurants and florists that tend to pay more for insurance protection against spoiled goods are likely to have the higher-priced policies that cover the first 12 to 24 hours of a major interruption, said Sherilyn Pastor, an insurance lawyer for McCarter & English LLP.
Theaters, hotels and stores that had to refund tickets and turn away customers may not carry insurance that would have covered their losses.
"The companies that lost perishable items are the more likely companies to have bought business interruption policies that don't have time restrictions," Pastor said.
"While each of the companies will sustain losses, a very substantial amount will not be covered."
U.S. businesses will lose $280 million to $800 million in spoiled goods, and another $70 million to $200 million in perishables will rot in homes, estimates Patrick Anderson, a principal at Anderson Economic Group in Lansing, Mich.
David Steuber, a partner at Howrey, Simon Arnold & White LLP, said the 12- to 24-hour limitation may not apply to policies covering instances in which a supplier or customer interruption causes a loss to the policyholder. Other policies may cover losses because the police or other authorities blocked access to a business, he said.
"There will probably be a number of these losses that will not be insured," Steuber said. But "other broader provisions may very well trump some of these limitations."
Businesses typically pay annual premiums of about 2 percent of what they expect they'd need in the event of an interruption, Pastor said. That means a company that wanted $10,000 for a month of lost business would pay $2,400 a year.
Cohen, like many other operators of ice-cream shops, gave away scoops Thursday. He said he handed out about 20 gallons and he would have given away more except it became too dark.
