SOUTH STREET SEAPORT — Most South Street Seaport business owners didn't carry flood insurance, and those that did are struggling to navigate policy loopholes — complicating the recovery process after Hurricane Sandy, officials said.
At the Seaport, which is located in Flood Zone A and was devastated by Sandy, many owners opted against the costly extra insurance — either because they couldn't afford it, believed they weren’t eligible for coverage or didn't foresee the level of devastation wrought by Sandy.
"A majority of these folks do not have flood coverage, so therefore they cannot be reimbursed," said Ro Sheffe, a Community Board 1 member, who's leading the board's newly formed Hurricane Relief Small Business Task Force.
"What we're hearing is that a majority of them are having great difficulty with insurance claims."
A typical commercial insurance plan does not cover damage caused by floods, according to Loretta Worters, of the Insurance Information Institute. It also does not typically include business interruption insurance, which would cover the cost of lost income during the time a shop is forced to close. Business owners can buy flood coverage either through a private insurer or the federal government’s National Flood Insurance Program, she said.
Kevin Barry, the manager of Grandma’s House restaurant on Peck Slip — which was open for just three months before it was destroyed during the storm — said he didn’t think Grandma's was eligible for flood insurance.
“All I know is we applied to stuff, but we got rejected,” Barry said, adding that he and many others never anticipated the type of flooding they saw during Sandy.
"We got wiped out completely," he said. "Whoever thought this was gonna happen? No one knew."
Worters said there’s no rule exempting businesses in Zone A from getting flood coverage, but that the premiums for high-risk areas could be so expensive that they’re out of reach for many.
“If you’re in Zone A, you would be paying a lot more,” she said. “That’s part of the problem for a lot of businesses — they don’t want to spend the money on it. They want to spend that money on putting it back into the business.”
Andy Oh is a co-owner at two Seaport businesses: Cigar Landing, a cigar shop and lounge, and Fishmarket Restaurant on South Street. He said he considered getting flood insurance before opening but found it “prohibitively expensive” — two to three times the annual rate for a standard business plan.
For many businesses that are just starting out, the cost can be unaffordable.
When Amanda Byron Zink, owner of The Salty Paw, opened her Peck Slip dog grooming spa six years ago, the extra insurance was out of the question.
"We couldn't even think about getting flood insurance," said Zink, who still does not carry flood insurance. “We could barely pay our rents back then.”
At the Cowgirl Sea-Horse, a restaurant on Front Street that reopened Thursday night for the first time since the storm, owner Jay Savulich said they’d gone out of their way to buy extra flood insurance. But after Sandy, he “unearthed the policy out of the soaked box” to find a provision that stipulated the coverage doesn’t apply because they’re in Zone A, he said.
He's filing a claim anyway and is working with the insurance company, but it's up in the air whether the damages will be covered, he said.
“We’re working through the inconsistencies. But the reality is that it’s not clear that we’re covered even though we bought flood insurance,” Savulich said.
Uncertain about whether insurance will bring some relief, several business owners said they’re looking for other ways to get back on their feet. Cowgirl Sea-Horse and Fishmarket Restaurant have both launched fundraising pages, asking loyal customers to donate to their recovery.
Oh said Fishmarket will rebuild if he can raise enough money. Cigar Landing, meanwhile, reopened a week ago, but business has been slow. An insurance appraiser came to the store last Tuesday to take photos, but Oh said he isn't optimistic.
"He kept using the word 'flood,' and I didn't like that," Oh said with a laugh. "But who knows? Maybe he'll take some pity on us."
In spite of the challenges, Sheffe said they are working with elected officials for help with insurance hurdles.
"We're considering having the state attorney general look into it," he said, "and see if there's anything they can do to try to persuade the insurance companies to loosen their rules a little bit."
The city and state have offered assistance in the form of small business emergency loan programs, but Sheffe said the feedback he's gotten from the area's business owners is clear: They need funding now, and can't afford to take on more debt.
Sheffe and the board are trying to start a small business grant program similar to one that began after the 9/11 attacks to help neighborhood establishments recover.
"We have a whole community in crisis down here," he said. "We can't afford any more loans. We need cash."
At Pasanella and Son Vinters, a wine shop on South Street, owner Marco Pasanella said he is lucky to have flood coverage, as it was a requirement of his mortgage. But even with funds to rebuild, he said, there's a fear that businesses will continue to suffer if the neighborhood itself doesn't recover.
Many of the Seaport's loyal customers, the residents who live in the area or work in the Financial District, are still displaced from their homes or office buildings, Pasanella said.
"Those people aren't around. That's what keeps me up at night," he said, noting he sees a tough holiday season ahead, during the time of year when businesses bring in most of their revenue.
"How do you have a business if you no longer have the customers?"