SeaFood Business

MAR 2014

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Photo courtesy of The Lobster Place Pardon the interruption Restaurateurs recommend reviewing insurance coverage in the wake of Hurricane Sandy 42 SeaFood Business March 2014 Visit us online at www.seafoodbusiness.com BY LAUREN KRAMER W hen Hurri- cane Sandy arrived in O c t o b e r 2012, Ian MacGregor, CEO of Te Lobster Place, knew business wouldn't be good. "We ex- pected it to be disruptive, but no one expected that level of devastation," says the owner of the supply company. Te Lobster Place has the largest seafood market in the North- east at its New York storefront at Chelsea Market, as well as a warehouse 12 miles away that supplies seafood to hundreds of metropolitan area restau- rants, hotels and caterers. Tough the hurricane and fooding did not hit either business directly, it caused up to fve days' worth of power outages that resulted in the loss of $100,000 of perish- able inventory and another $150,000 in lost business. At the time he assumed most of those losses would be covered by the business-in- terruption insurance policy he'd taken out with Guard Insurance Group. "If you have a business-interruption insurance policy and your businesses are not in a food zone, you assume your insur- ance will cover it," he says. MacGregor had a standard property casualty liability in- surance policy with provisions for food storage and property loss. His landlord had not re- quired him to carry food in- surance, "but you'd assume if your lights go of due to fooding anywhere, you'd be covered by your insurance," he says. "Tat wasn't the case — we weren't covered at all." Te insurance policy's conditions for what would be covered in a power outage precluded an outage caused by a food at an electricity station 5 miles away. As he fought for reim- bursement, MacGregor re- fected on the concept of a standard insurance package. "An insurance broker will sell you a standard package that insures against fre, theft or a patron slipping on your property, and you assume that because those are the standard policies being sold, those are the incidents with the highest risks," he says. "However in the 11 years I've been operating we've never had a fre, a slip- page or a signifcant theft. What we have had are two major business interruptions due to power operations: the blackout of 2003 and Hurricane Sandy. I believe there's a disconnect between the contingencies those poli- cies insure against and the contingencies most likely to happen." Bob Cooper, president of Chefs International, had more than 4 feet of water in one of the company's restau- rants, Jack Baker's Lobster Shanty and the adjoining Sunset Ballroom in Point Pleasant Beach, N.J. None of its seven restaurants along New Jersey's coastline were left unscathed during Hur- ricane Sandy. In addition, a fooded storage facility cost up to $400,000 in lost sea- food product. "We generally take in large amounts of product to protect ourselves from fuc- tuations in the market," he says. "We store it ourselves and then distribute it to our seven stores." Cooper's com- pany, covered by insurance, was one of the lucky ones. "We had food and wind insurance with Lexington Insurance Co., and we need- ed both," he says. "It took about a year to get things sorted out with the insur- ance, but we were back and running pretty quick after the hurricane." In hindsight, Cooper re- alized how vulnerable his businesses were to fooding. "We've been doing business for over 60 years in the same locations, and we never came close to what we saw during Sandy," he says. "I'd advise any seafood business that's in an area where there's even a remote chance of a food to get food insurance, because the cost of insurance com- pared to what could happen is minimal. Stay on top of Behind the Line The Lobster Place lost thousands in inventory and sales due to Sandy. Continued on page 76 42_BehindTheLine_72Conferences_76Jump.indd 42 2/19/14 1:07 PM

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