A raging fire that destroyed dozens of businesses along the Seaside Park boardwalk in New Jersey Thursday is expected to be a multi-million dollar insurance event, an insurance expert observed.The fire, propelled by strong coastal winds, swept through at least six blocks in Seaside Park and Seaside Heights — areas that were freshly rebuilt after last year’s Superstorm Sandy.
From the insurance standpoint, the insurance checks would likely be cut right away for claimants since most businesses would have coverage against the peril of fire, said Dr. Robert Hartwig, president and economist at the Insurance Information Institute.
“Most businesses carry property insurance coverage and virtually all property insurance policies cover the peril of fire,” Hartwig told Insurance Journal.
“It’s extraordinarily tragic that it’s the same area that was struck hard by Sandy last year,” he said. “In the case of Sandy, most of the damages were done by flooding. And many of the businesses did not have flood coverage.”
“But this will be different — most businesses will be covered because they have coverage for standard property risks which include fire,” he said.
Hartwig said many businesses will also have business interruption coverage that can help tie them through until the point where their business can be reopened after it’s repaired or rebuilt.
Additionally, workers who may have been injured in the flames or by smoke would be covered by workers’ compensation, though there have not been reports of injured workers, he said.
“It would be a pretty compressed timeline for getting these claims settled. There is no doubt that there are adjusters already on the scene today,” he said. “And as soon as they are allowed to enter the areas that were damaged, they would be able to begin the adjustment process and begin writing checks for businesses that suffered losses in this event.”
While it’s too early to get a detailed estimate, it’s going to be a multi-million dollar loss, he said, “because we are talking about 30 to 60 businesses of a six-block area, along with business interruption claims, in addition to the straight forward property damage. So it will be a multi-million dollar insurance event. It’s just unclear at this point how many millions that we are talking about.”
“In this case, the checks will be cut right away as a result of the fact that most businesses have coverage against the peril of fire,” Hartwig said. “But it also illustrates how important it is to not have any gaps in your insurance coverage when you compare this to the fact that many businesses did not have flood coverage last year.”
Hartwig said affected businesses in the Seaside area need to begin to make an assessment of their damages with photographs and begin to put together their paperwork that will document what they had in the way of inventory, for example, for their businesses, “because all of that will be relevant to the claims filing process.”
Topics Profit Loss
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