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A Hidden Safety Net, Made Visible By A Storm (Cont'd)

Days after Sandy, carting out stuff destroyed by flooding.
Seth Wenig
Days after Sandy, carting out stuff destroyed by flooding.

Last fall, we wrote:

The Fairway supermarket in Red Hook, Brooklyn is the sort of place New Yorkers, accustomed to cramped spaces, talk about with amazement. It's an actual, full-size supermarket, right at the edge of New York Harbor.

It's a beautiful setting, but one that was diastrous last week, when Sandy came through.

"There were five feet of water throughout the store," Bill Sanford, the president of the company told me. "Everything was submerged."

They had to throw out dumpsters worth of food. Chicken, fish, vegetables.

Fairway is a local business with about a dozen stores, not some big national chain. The flooding in Red Hook really seems like the worst possible scenario — a terrible, expensive mess. But it turns out, there is a hidden backup system that has already kicked into action.

"We have business-interruption insurance," Sanford said. "It basically pays what your business would have been earning. It pays for your wages for your employees."

That's not all. Fairway also property and casualty insurance. Which covers all the stuff — equipment, rotten food, destroyed refrigerators, whatever.

Four months later, the Fairway in Red Hook is about to reopen. So it seemed like a good time to ask a simple question: Did the company's insurance work? Did it pay for everything that Bill Sanford, the company's president hoped it would?

"It did," Sanford told me today. "We've gotten over $10 million in advances so far." in the end, Fairway expects to collect $20 million total in insurance payments.

Insurance allowed the company to keep paying the store's 350 employees, and to replace everything the flood destroyed — from loaves of bread to refrigerator cases. Insurance even covered the profits the company would have made if the store had been open.

Fairway was planning an IPO last fall, but put it on hold after the storm. "We only have 12 stores," Sanford said, and having one of them out of commission just made for too much uncertainty. But this week, the company updated its filing with the SEC. The IPO is back on.

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