Business owners who are trying to get back on track after hurricanes Harvey and Irma now face a different sort of challenge: trying to recoup lost income from their insurers.
Exclusions in the fine print of policies, along with waiting periods and disagreements over how to measure a company’s lost income, make business interruption claims among the trickiest in an industry renowned for complexity.
“I think the whole thing is a rip-off,” said Thomas Arnold, an optometrist in Sugar Land, Texas. He said his business, Today’s Vision, was shuttered for almost five days after Hurricane Harvey struck because nearby flooding kept employees and patients from getting there.
Arnold says he pays $1 083 (R14 300) per month for coverage. But after he filed a claim, he said the United States unit of Zurich Insurance Group AG, rejected it because his business was not physically damaged.
Zurich does not comment about specific claims, the company said in a statement. It added that business interruption coverage generally requires “direct physical damage” to a property for a payout.
It was Arnold’s second disappointing experience with business interruption coverage. He said another insurer denied his claim in 2008 after a nine-day power outage from Hurricane Ike.
Devastating storms are hitting the United States with increasing frequency. Risk-modelling firm AIR Worldwide predicts losses to all properties from the flooding in Texas alone will be $65 billion (R857 billion) to $75 billion (R988 billion), regardless of whether they are insured.
The income lost by shuttered firms makes up a significant chunk of overall losses from a natural disaster and can hobble the pace of a community’s economic and social recovery.
Arnold is rethinking his coverage.
“I’m going to sit down with my insurer and drastically cut my insurance,” he said.
“If my office burns down or a tornado hits it, I want coverage for that,” Arnold said.
“But if people come in my office and steal my glasses, I’ll pay for that.” –