05/ 25/ 2006
by Lena Basha
When weather reports warned that Hurricane Katrina was headed straight for New Orleans, Marcy McCall thanked her lucky stars that just a few months earlier she had purchased business interruption insurance for her Garden District deli.
"It made me feel good about having it," says McCall, who, along with her husband, Gene Fabre, runs the lunch-only deli, The Grocery.
"We were evacuated, so we didn't know what we were going to come home to. The insurance gave us peace of mind that no matter what the business looked like when we got back, or how long it was going to be closed, it wasn't going to ruin us."
When McCall finally returned to New Orleans one month after Katrina hit, she found her business still intact, except for a damaged ceiling and spoiled cooler. Covering profits lost while a business is closed due to a disaster, the business interruption insurance allowed McCall to pay herself and her employees while The Grocery was inoperable. It also helped her make the decision to keep the business closed until she knew it was safe to return to New Orleans.
"Having the insurance allowed us to make rational decisions about everything and focus on the issue at hand—reopening the business, not figuring out how we were going to fund it," says McCall, whose $200 a month policy paid $20,000 in lost profits for the six weeks The Grocery was closed.
"Business interruption insurance gives you options," says Diana McClure, assistant vice president of business protection at the Institute for Business and Home Safety. "It puts money in your pocket that helps you remain viable—money that you probably would have had to take from a savings or retirement account."
Today, McCall says business is better than ever, which she owes to being able to reopen so soon after Katrina. "When we came back, there was nothing else open, so we actually increased our customer base," McCall says.
