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Restaurant owners forced to close for days or weeks after Superstorm Sandy have found their business interruption insurance worthless because they lacked flood coverage — even though they didn’t see a drop of water.
To their dismay, their policies won’t pay for losses including spoiled food because the power outage that shut them down was caused by flood damage — not to the eateries, but to Con Ed.
When Sandy’s saltwater surge crippled Con Ed’s East 13th Street relay facility on Oct. 29, it plunged parts of Lower Manhattan into darkness.
Among the crippled eateries was Alison Eighteen, a pricey, pretty modern-American place on 18th Street between Fifth and Sixth avenues that The Post praised in a review last May.
Owner Alison Price Becker, a high-profile restaurateur in Manhattan and the Hamptons for more than 20 years, was shocked last month when insurer Tower Group rejected her business interruption claim.
“We didn’t have a drop of water,” she said. “It was Con Ed’s flood, not ours.”
It’s a crushing turn for Price Becker, who had to close her famously romantic bistro Alison on Dominick near the Holland Tunnel when the 9/11 terrorist attack cut off customer access.
Alison Eighteen was closed for six days following Sandy and the lost business plus food damage — from a $4.60 box of cabbage to 10 full racks of lamb worth $2,575 — cost her business $72,000.
It might not sound like a fortune, but it’s a severe strain on a restaurant with a $150,000 monthly budget — not including $50,000-plus monthly for food and wine.
Price Becker says making up for the lost $72,000 will require $750,000 in new revenue — which could take up to four months.
Alison Eighteen’s insurance policy cost $25,000 a year. Flood coverage for $100,000 would have cost a mere $1,200 more — “but because we’re in the middle of Manhattan, there was never any question of our needing it,” Price Becker said.
“We now have a terrifying financial situation and nowhere to turn for help,” she said.
Wolfgang’s Tribeca, part of the steakhouse chain, is among other places cited by industry insiders as having trouble collecting for business interruption. It closed for five days. A manager who asked not to be named said only that it got back “only 2 or 3 percent” of its claim.
Fewer than 5 percent of Manhattan restaurants have flood coverage, said Mario Saccente, executive vice-president of the New York State Restaurant Association’s Long Island chapter.
Saccente, who is also Price Becker’s insurance broker, said not all restaurant policies excluded coverage for flood damage to utilities and that some carriers were paying for lost business even under policies that did.
Saccente said Tower was “definitely adhering to the letter of the law” in denying Alison Eighteen’s claim, but wonders why the rejection took so long, after months of leading Price Becker to believe she’d collect.
Price Becker filed her claim soon after Sandy, but did not learn until March 16 her policy’s fine print left her high and dry. Tower was able to cite the power-failure exclusion clause because Con Ed, on Nov. 26, blamed the power loss on flooding.
In contrast, she said, Long Island’s reviled LIPA did not specifically blame the collapse of its grid on high water.
That, Saccente said, allowed many Long Island eateries that had to close temporarily to collect business-interruption proceeds — including money from Tower Group.
Tower didn’t respond to a request for comment.
Price Becker requested state mediation. So have other owners, who clammed up when contacted by The Post.
Drew Nieporent, a partner in Nobu and Tribeca Grill, wouldn’t discuss his own woes, but said: “As somebody who has paid for restaurant insurance for close to 30 years, I’m totally shocked, frustrated and astonished at how little response, empathy and understanding insurance companies have shown.”