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Very few small and midsize businesses affected by Superstorm Sandy have been able to recover some portion of their financial losses through insurance, according to a new report by the Federal Reserve Bank of New York.
Nearly one-third of smaller businesses — firms with fewer than 500 employees — in the storm-affected regions of New York, New Jersey, Pennsylvania and Connecticut that reported financial losses in the immediate aftermath of the October 2012 superstorm were uninsured when the storm made landfall, according to a supplemental report included in the New York Fed's “Fall 2013 Small Business Credit Survey,” released on Monday.
Among the businesses that had purchased property, flood or business interruption insurance, 65% said they were not able to recover any of their financial losses under those coverages. Fourteen percent said that their insurance program provided reimbursement for some of their financial losses, and only 9% said their coverages reimbursed most or all of their losses, according to the supplemental report.
Fifty-four percent of storm-affected businesses had purchased property insurance prior to Sandy, while 30% and 12% of firms were insured for business interruption losses and flood damage, respectively.
Out of the 950 firms surveyed, 33% reported incurring immediate financial losses as a result of the storm.
A majority (59%) of firms said the losses they reported immediately after the storm were attributable to decreased customer volume, while 43% of firms said their storm-related losses were the result of utility or service disruption and 29% said their losses were due to damage or destruction of physical assets.
Approximately 22% of firms reporting storm-related financial losses in the first weeks and months following the storm said they had incurred a net loss in excess of $100,000, according to the Fed's report.
The New York Fed's supplemental report on Superstorm Sandy-affected businesses is available here.