For the dozens of businesses that were destroyed in the massive, six-alarm fire in Seaside on Thursday, the future of their companies comes down to insurance — and just how much coverage each restaurant, retailer or arcade has.
It figures to be more complicated than sorting out the mess after Sandy, Seaside Heights Mayor Bill Akers told The Star-Ledger. In the hurricane's wake, everyone filed insurance claims through the federal government.
"All of these properties are privately owned, and that includes the boardwalk," Akers said. "It's on them to do it."
Glenn Tippy, president of Gerrity Baker Williams Insurance, in the Flanders section of Mount Olive, said the good news is that typical commercial insurance policies include coverage for fires, so if the businesses burned in the fire have insurance, they will most likely be covered.
But on its own, basic fire coverage may not be enough to bring these businesses back to life. Such a policy may not cover business interruption, which can help a company cover lost income or profits as a result of disaster-related damage, and can also pay for fixed expenses — like rent, utilities or contracts — that must be paid even if a business isn't able to open.
"Having the money to replace the building is great, and it's a good first step," Tippy said. "But after that, can you replace the earnings?"
Some business owners opt not to take on the extra expense that comes with additional coverage — which can be their undoing, Tippy said.
"They can cut their expenses, but they still have a lack of profit," he said.
Gov. Chris Christie said today he is sending the state's banking and insurance commissioner, Kenneth Kobylowski, to Seaside on Saturday to survey damage from the fire, which is now about 95 percent contained. The state offered a "mobile cabinet" to residents and businesses in the wake of Hurricane Sandy.
Michael Gallagher, head of the property claims practice at Wells Fargo Insurance, said there are other ancillary policies that can be critical after a disaster hits, since a business may suffer loss without sustaining any physical damage.
Gallagher said attraction property coverage can be invaluable for an area that is dependent on other properties being up and running to attract customers. A Shore town would certainly fit that definition. And a service interruption policy can be critical if, for example, your building lost power because of the fire, but wasn't actually burned in the blaze.
Overall, Gallagher said business owners should sit down with their insurance agent every year, weigh the potential risks and consider adding to or adjusting a policy to make sure the business is covered.
"There's that constant involvement in the renewal process," Gallagher said.
"Sometimes it's a matter of boosting limits within the policy or tweaking wording," he said. "Claims are always going to be driven by details. It's the detail of the loss and the details of the coverage."