Financial Preparedness

Storm Sandy: Lessons Learned for Small Businesses

September 19, 2013

When Storm Sandy made landfall in the greater New York City area October 2012, it was like the stuff of a science fiction movie. Ocean surges overtook entire communities. Mass transit systems were paralyzed and tunnels flooded. Millions were without power for days.

Thousands were left homeless.  Not since the Great September Gale of 1821 has a hurricane directly targeted parts of New York City. 2

Months later, many small businesses within Sandy’s wide East Coast swath are still struggling to get back on their feet. According to the U.S. Chamber Foundation's Business Civic Leadership Center, between 60,000 and 100,000 small  businesses have been negatively affected and as many as 30% of them will fail in the coming months. Early estimates put insured losses as high as $20 billion not including national flood claims, making Sandy the third costliest U.S. hurricane based on insured losses, topped only by Hurricane Katrina ($46.6 billion) and Hurricane Andrew ($22.9 billion).3

What has Sandy taught us? How can medical practices be better prepared in the future?

Tip: Does your practice have a business continuity plan in the event of a disaster? Visit to build one with our step-by-step interactive guide.

1. Expecting the Unexpected is Becoming a New Reality

Extreme weather is real and it's happening with increasing frequency. In fact, 2012 was the second most extreme year on record for the contiguous United States. Eleven $1 billion plus events occurred on U.S. soil4 with Storm Sandy topping off 2012 with her $20 billion price tag.

Storm Sandy Lesson: It's important to know the potential risks for your area and take measures to reduce your exposure now, before an event occurs. Disaster preparations - including a business continuity plan in the event of a disaster - should be taken care of well in advance of extreme weather. Don't wait for the weatherman's forecast to start planning.

2. Storm Time May Be Down Time

One day before Sandy's landfall, coastline communities were evacuated, mass transit was shut down, and schools and businesses were closed. By the time the storm had passed, many businesses had already been closed for two full days. 

When the power went out some businesses assumed they were prepared with portable gas generators at the ready. Unfortunately, without power and a backup plan of their own, many fuel stations were unable to pump gas. Long lines and rationing at stations that were open illustrated that backup generators alone couldn’t keep a business open after a storm of this magnitude. 

According to a post-Sandy survey by The Hartford, 71 percent of small businesses affected by the storm experienced a power outage. 

Of those, 74 percent had  to close their doors for a period of time, and it took them an average of 7 days to reopen.6  Loss of connectivity also had a big impact for 56% of The Hartford survey respondents,6 likely affecting their ability to contact customers and keep their businesses open. 

Storm Sandy Lesson: How long could your practice survive with its doors closed? Put aside emergency funds to help you survive a short term disruption to your practice and talk to a Hartford representative about business income insurance. This coverage may reimburse you for income lost if your practice is closed due to a covered cause of loss such as a power outage.

What is business income coverage?

When disaster strikes, your practice may need to close temporarily. And that means a loss of income, which is one of the main reasons most businesses don't reopen after a serious loss. In fact, an estimated 40% don't reopen after a disaster.7

When the unexpected occurs, expenses don't go away. In fact, they may rise significantly. Without revenue, it can be difficult for a business to survive.

Business Income insurance helps replace lost business income and covers continuing expenses (including payroll) and extra expenses associated with helping to keep a business going.

3. Protecting Your Business' Most Important Assets

MCD, a small digital marketing and customer experience agency in New York City, was prepared for Sandy, or so partner Ian Magnani thought. When the storm hit, backup drives were safely stashed in a bank vault blocks away, the office was secured and employees were home with their laptops ready to work.


"We were prepared for a small scale power outage, but never anticipated New York City losing power for almost a week." - Ian Magnani, MCD

But there was an unexpected wrinkle: Sandy took the power out to both the bank and the office, leaving MCD's file backup drives inaccessible. The team needed to retrieve the files and the office was their only hope. Entry was complicated, though. The elevator wasn't working and the stairway fire door to the office was locked from the inside. Ian and his landlord had to enter the building's darkened stairway with flashlights and take down the fire door with a crowbar.

"Our backup files were too close to our current location," Ian said. "We were prepared for a small scale power outage, but never anticipated New York City losing power for almost a week." Since Sandy, MCD has a new policy of mirroring file storage and backup drives to their office in Chicago. They've taken other measures, too, including a door that opens from the outside.

Storm Sandy Lesson: Backing up data daily is not enough. Keep your most important documents, like patient records, practice legal business documents, employee personnel records, in a safe that has been tested and listed by UL (Underwriters Laboratories) as being resistant to fire, heat, burglary tools and torches. And keep copies of critical data and important records at a secure, offsite location to avoid loss to the same disaster that destroys the original.

Tip: What would your practice do if you found yourselves is a similar situation as MCD? Hard copy patient records can be as vulnerable as electronic records, so be sure to so back up files for both in secure locations - both on and offsite.

4. Getting Back to Business Can Be Complicated

In Sandy's aftermath, millions were struggling to get out from under the devastation and at the same time, creating contention for resources to help with rebuilding. Forty-four percent of small businesses impacted reported limited access to suppliers and vendors as well as issues with customers and employees (65% and 47%, respectively), many of whom were absent dealing with their own recovery or without the public transportation they normally counted on.6 It all added up to a much different story than a claim for a singular event impacting a single business.

Storm Sandy Lesson: As part of your business continuity planning, create a contingency operations plan to help keep your practice going in the event of extreme weather. Ask yourself the following questions to help formulate your plan:

  • Are there any alternative locations from which I could operate my business in the event of a disaster?
  • Do I have backup suppliers or vendors located outside of my region?
  • Do I have emergency contact information for each of my employees?
  • Does my practice have an emergency response plan in place, with established procedures for shutting down operations, communicating to employees and patients, and protecting vital records?
  • Do I sufficiently and routinely backup data, including electronic patient files, in case of hardware failure or data loss?

5. Make Sure You're Covered

Reviewing your insurance coverage on an annual basis is important to help ensure your practice has the right types and amounts of insurance coverage for your unique needs. Many victims of Superstorm Sandy were shocked to learn that they were not covered for various losses they incurred. Flood damage, for instance, is typically not covered by your standard business owner's policy. And your business doesn't have to be on the waters' edge to be at risk of major flood damage caused by storm surges, cresting rivers and melting snow

Additionally, you should inquire about business income insurance. Many business owners who thought their business insurance policies would cover lost income in the event of storm like Sandy discovered that they are not covered for a power outage occurring off premises. 

Storm Sandy Lesson: Talk with a Hartford representative annually to review the details of your coverage. Ask if additional coverages, such as business income for off-premises utility services, are right for you and your business.

Tip: Annual policy renewal is a great time to review your policy to make sure you have the right coverage. Visit to download a business insurance coverage checklist that you can use to prepare for that conversation.

Being Prepared and Protected Can Make the Difference According to The Hartford survey, more than one-third of small business owners (36%) affected by Sandy reported that her impact was significant, with 52% impacted reporting loss of sales or revenue.6

In fact, an estimated 40% of businesses impacted by a disaster don’t reopen their doors.7However, with the right preparation and protection your practice can prevail. The Small Business Administration and FEMA offer valuable resources and assistance designed specifically for small businesses in the event of a natural disaster. Visit to get more tips and resources on disaster recovery planning.

For more information on business insurance coverage for your practice, speak with a Hartford representative at 1-800-417-8054 or visit

1 "Hurricane Sandy Power Outage Map," Huffington Post, 10/30/2012 
2 NYC Hazards, NYC Hurricane History; New York City Office of Emergency Management 
3 Insurance Information Institute 
4 Preliminary Info on 2012 U.S. Billion-Dollar Extreme Weather/Climate Events, NOAA 
5 "2011 a Year of Climate Extremes in the United States," National Oceanic and Atmospheric Administration (NOAA), January 19, 2012 
6 Hartford Small Business Pulse: Storm Sandy, March 19, 2013 
7 Protecting Your Businesses, FEMA, last updated 3/1/2013 

This document contains only a general description of coverages that may be provided and does not include all the features, exclusions and conditions of the policies it describes. Certain coverages, features and credits may vary by state and may not be available to all insureds. You should consult the actual policy language and speak with the appropriate Hartford representative if you have questions. In the event of a loss, the terms of the policy issued will determine the coverage provided. Coverages are underwritten by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford Plaza, Hartford CT 06155, CA lic. #5152.

(c) April 2013 The Hartford Financial Services Group Inc., Hartford, CT 06115 All Rights Reserved. All information and representation herein are as of April 2013.

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