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Sandy: What biz owners should know about insurance

(MoneyWatch) Superstorm Sandy wreaked havoc on thousands of businesses in addition to millions of people. Even though the storm has passed, the cost to business owners continues to rise.

Some, but not all, of these costs will be covered by insurance. 

Shouldn't everything be covered? Well, yes and no. Direct storm damage typically is covered. Even so, many business policies have special deductibles or sub-limits for wind or hurricanes. This means that the insurance company will pay only a portion of the claim. The business owner must pay the rest. 

Most policies also include what's known as business interruption insurance. This coverage pays for the loss of income when a business can't operate due to a covered loss. The bad news is that business interruption insurance will not generally kick in unless there is actual physical damage to the building. So a business that shut down due to power outage or evacuation orders may well be out of luck.

Flood damage is also usually not covered by business insurance, only by the federal National Flood Insurance Program. Water that comes up from the ground is generally considered a flood and would be covered only by this program, whereas water that comes down from the sky would typically be covered by a business property policy. 

You need to know this so that you can describe the loss correctly when you file your claim. You don't want to limit your coverage by using the wrong wording. 

How do I find out what's covered and what isn't? Information is power! The first step is to read your policy contract, of which there are two parts. The "declaration page" is what lists the coverages, limits and deductibles. The "policy jacket" is the booklet that goes into the detail of the terms, conditions, exclusions, duties and other provisions. It's important to read both. What the large print giveth, the small print taketh away. 

What else should I do? Next, contact your insurance company as soon as possible. Most, if not all, policies limit the amount of time you have to report a claim. 

You'll want to make temporary repairs like patching holes, replacing glass or removing water to prevent additional damage and get your business back in business. However, hold off on the permanent repairs until after the adjuster gives you the go ahead. Don't forget to take pictures of the damage before you make any repairs. 

 What if my claim is still denied? Contrary to popular belief, most reputable insurance companies want to settle claims fairly and quickly. They risk serious fines and legal expenses by not doing so. If your claim is denied, ask the adjuster to show you where in the policy they are basing their decision.

If you still think it should be covered, ask to talk to the adjuster's supervisor. Just as with any other business dealing, keep moving up the food chain until you reach someone who can give you satisfactory answers. If you're still not satisfied, in the insurance policy you will find specific instructions on how to file a dispute. 

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