Can Commercial Property Insurance Save Your Business?

Stephen Robert Morse

Small business owners, take note of the great Julius Caesar, who once quipped, “No one is so brave that he is not disturbed by something unexpected.”

In Rockville Centre, New York, the Pantry Diner was a hallmark of my childhood. After every school play, major sporting event, Thanksgiving morning, or any weekend at 2 a.m., friends would gather at this establishment to enjoy burgers, omelettes and classic Greek salads. This establishment served as a de-facto community center for dozens of local groups. But, on November 14, 2011, all of that quickly changed.

A fire in the restaurant ended in a disaster. As the Patch reported at the time, a worker accidentally left an oven on overnight. And by 2:40 a.m., there were 20-foot flames flying into the air in every possible direction. A significant portion of the diner’s interior was completely melted to the point that a firefighter on the scene said the kitchen would be “unrecognizable” to most people.

And, just like that the Pantry Diner, quite literally, went up in smoke.

One forgetful action was all it took to destroy the business that formerly had thousands of fiercely loyal patrons and had supported the livelihoods of dozens of employees.

When I was back at my parents’ home recently, I drove by the Pantry Diner. It remained shuttered, with temporary fencing blocking off the entire place. Five years later, the diner hadn’t reopened, and the property sat vacant. Who knows how much income has been lost for the owners of the diner? I imagine that the owners didn’t have an adequate business insurance plan to cover such a catastrophe; otherwise, one can presume they would have started the rebuilding process as soon as possible after the incident, as their restaurant clearly did a brisk business.

However, it needn’t have ended in tragedy for the Pantry Diner. If there was ever a case for procuring commercial property insurance to protect your business against fire, natural disasters and theft, this was it.

Hurricane Sandy: With Insurance and Without

About one year after the diner’s fire, much of the New York area was hit extremely hard by Hurricane Sandy, a storm that rocked the East Coast of the United States with a vengeance from October 29-31, 2012. The businesses that were properly insured made out far better than businesses that lacked proper insurance plans.

After Sandy – Recovering with Insurance

Two Trees Management Company, a property developer in Brooklyn, N.Y., is a 100-person, family-owned firm run and managed by Jed and David Walentas. As Inc. reported, the firm “experienced flood damage to 20 percent of its nearly 2 million square feet of office space, apartments, and condominiums in the Dumbo area of Brooklyn. Water flowed into basement areas that housed critical mechanical centers and power grids that keep the buildings functioning.”

Fortunately, the the owners had appropriate insurance coverage and were able to recoup $2.1 million in insurance. The firm had to spend $2.3 million to properly repair its structures and upgrade them to better prepare against future storms, but the company is still operational. Additionally, its new investments mean that it will be better prepared than before to combat heavy storms in the future.

After Sandy – Recovering without Insurance

Contrast this with the restaurant Memphis Pig Out in Atlantic Highlands, N.J., that also felt devastating effects from Hurricane Sandy. quotes the restaurant’s owner, Mark Strassburg as saying that his restaurant got more than six feet of water in the basement.

The firm had a very basic business insurance policy that only allowed it to collect $5,000, which hardly paid for the $55,000 in damages. They had no additional insurance to protect it against natural disasters. Mark says that sales declined 30 percent two years in a row after Sandy. This led to his wife having to sell $10,000 worth of her own jewelry to keep their business afloat.

Ultimately, the restaurant accepted a $50,000 grant from the New Jersey Economic Development Agency in October 2013, to cover its back taxes and purchase more insurance.

Commercial property insurance can be your savior

As Woody Allen joked, “There are worse things in life than death. Have you ever spent an evening with an insurance salesman?” Well, an hour with an insurance salesman — or an hour filling out some forms online — is likely a whole lot easier than not having enough money to cover the costs to rebuild your business from scratch in the event of a devastating fire, weather event or theft. Commercial property insurance can be the answer to your prayers.

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