Reassured by Insurance

The right policy can plug a hole when a disaster strikes

FORT PIERCE, Fla. -- Of all businesses that close down following a disaster, such as a hurricane, more than 25% never open their doors again, according to the Insurance Information Institute. Thus, from the east coast of Florida to as far west as Houston, smart retailers affected by this year's disastrous hurricane season are thanking their lucky stars for one thing: Business Interruption (BI) insurance.

It plugged a $1 million hole for us last year, Charley LaMont, the former vice president of fuels for Timesaver Oil Co., told CSP Daily News. It was [image-nocss] more important for [us to have] the business Interruption [insurance] than it was for the casualty [insurance] in dollar impact to our P&L.

In 2004, Timesaver saw two of its stores destroyed by the triple impact of Hurricanes Charley, Frances and Jeanne, and another 10 stores damaged. And as the chain now cleans up after Hurricane Wilma cut power to at least five stores and its Fort Pierce, Fla., headquarters, LaMont remembers the help BI insurance provided. Wilma was devastating for them, said LaMont, who now works for National Executive Personnel, Largo, Fla. They're scrambling to clean things up and get back in business.

Attempts to reach Timesaver Oil for comment were unsuccessful; however, LaMont supposed BI insurance will help fill some holes during the cleanup period.

Similarly, before Hurricane Rita came ashore in September, leaders at SSP Partners, a chain of more than 600 stores based in Corpus Christi, Texas, was prepared to tap its BI insurance if necessary. It insures us in case our business is interrupted, a store is closed and unable to function, Otis Peaks, vice president of human resources for SSP, told CSP Daily News.

In SSP's case, the storm was blown east of the chains primary market. But in 2004, Timesaver took three pretty strong hits that made the extra insurance invaluable.

After a waiting period [generally of about 72 hours] from the time your business is interrupted, then they begin paying for your business losses, said LaMont. So if you're losing $25,000 a week in merchandise sales, then the insurance will cover you just as if that revenue is still coming in. They will adjust it to the margin. Gasoline is included. If you're doing 50,000 gallons a week and your margin was 15 cents a gallon, then [they'll cover you] on a per-diem basis for the length of the coverage, which can be over a year's time, while you're rebuilding, permitting, engineering, the whole aspect.

That's where many in south Florida now stand as they wait for power to be restores. The area had plenty of gasoline at the pumps and storage terminals Monday, but pumping it was often impossible because of power outages, reported the South Florida Sun-Sentinel.

No electricity, no gasoline, Jim Smith, president of the Florida Petroleum Marketers & Convenience Store Association, told the newspaper. There are some locations with generators to pump gas, but for most of our members, that's a huge investment.

Florida Power & Light Co. had gas in its repair trucks, so work on restoring power began after sustained winds dipped below 35 miles per hour. Transport trucks that haul gasoline from the Port Everglades to gas stations also were to begin rolling once the storm-force winds haltedprovided there was electricity to pump gas from the storage terminals at the seaport, Smith said.

Still, station managers like Osman Chowdhury, who runs a Texaco station in Fort Lauderdale, were anxious about when they would get electricity back. If I don't get power by tomorrow, I can't even come to the store, because I won't have enough gas in my car, he told the paper.

Losses for stations already were mounting Monday, the report said. Chowdhury estimated if power was out for a week, he would lose $24,000 in salesabout $12,000 in gasoline sales plus another $12,000 in store. That does not include losses for hurricane damages at the station, including a torn canopy and broken sign. Last hurricane, power out went out in the area, but we still had it, he said. This time it's out everywhere.

Separately, Exxon Mobil Corp. has posted on its website a list of its stations in Tampa and South Florida that are open with gasoline. It will be updated daily, the company said. At times, due to high demand, some of these stores may be out of fuel for a short period. Please know we are working very hard to keep these stations supplied with fuel, it said.