As insurers brace for an expensive natural-disaster season because of storms and wildfires ravaging parts of the United States, the novel coronavirus is giving them an odd financial break.
Berlin Fisher, owner of West Sonoma Style Bar, styles a client's hair under a tent in Guerneville, California, U.S. September 1, 2020. Berlin Fisher/Handout via REUTERS
It is another hit for small businesses that rebuilt after major disasters in recent years, only to see revenue screech to a halt during the pandemic, and then enter another aggressive disaster season. It could leave some companies unable to survive, said John Ellison, an attorney at Reed Smith LLP who has represented policyholders in cases stemming from hurricanes Katrina, Rita and Sandy.
Most disaster claims are for property damage, but a “significant” amount still comes from business interruption, based on the way insurers have attributed losses after major disasters, said Piper Sandler analyst Paul Newsome.The amount of payouts for disasters during the pandemic depend on the business, said Loretta Worters, a spokeswoman for the industry-funded Insurance Information Institute. A liquor store whose business is booming might have higher revenues than six months ago, she said.
For instance, Big Bottom Market, a gourmet deli there, had to close from March to May. When it re-opened, business was initially off by 40% compared with the prior year, said owner Michael Volpatt. Introducing new services like catering stemmed the tide, but July revenue was still down 9%, Volpatt said.
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