The entire experience was “very sad,” says Vorbach, especially so for small businesses without flood insurance—which those along the storm surge-ravaged Jersey Shore needed to trigger their business interruption policies. Equally sad stories came from insureds that had turned down the agency's prior advice to buy certain BI endorsements or to increase their commercial-policy limits.

Now they know better. Superstorm Sandy, it seems, gave many small businesses—and small agencies—along the East Coast a hard lesson in the complex nuances of business interruption cover.

Out of some 300,000 housing units and 23,400 businesses in New York City that were damaged by storm surge, only 38,785 had flood insurance prior to Sandy—and a May survey of small businesses in the Tri-state area by the New York Federal Reserve Bank shows that only 8 percent of respondents with damaged businesses in New York, New Jersey and Connecticut had flood insurance.

There are different facets of business insurance, and the surprise that some folks saw after Superstorm Sandy was that they may not have had the right endorsements, says Jim Rubel, executive vice president for Property and Major Lines Accounts at Lockton Cos. in New York.

“Cognac is brandy, but brandy isn't cognac: they're both basically the same thing, but different,” says Rubel, who tailors policies for large accounts. He recommends they carry both property damage and BI as a general rule.

He recommends a Service Interruption endorsement, which would be triggered if a utility that provides power to a business is knocked out by wind or flood, as happened with Sandy, and therefore the business can't get power. “If you don't have that coverage, you're out of luck,” Rubel adds.

The Gormley LoRe Murphy Insurance Agency Inc. in Bayonne, N.J., saw similar BI issues after Sandy, says Jean Gormley. She, along with partners Pat Murphy and Madeline LoRe own the agency, which caters to local Bayonne-area businesses and local residents with shore houses.

For the most part, the insurance carriers came to bat and did as promised, but in some cases, issues did arise around the BI endorsement for off-premises power failure (OPPF). Each carrier views the endorsement differently, she says.

“Everybody came to the plate as best as they could. The companies really tried very hard,” Gormley says of the insurance carriers they worked with. But flood vs. wind vs. voluntary shutoffs caused confusion as to how and when the power went out.

If businesses had both BI and flood insurance and an adjuster declared their inability to operate as due to flood damage, they were getting paid, Gormley says. Those with wind damage were also getting paid.

But the businesses without flood insurance whose doors were shuttered because of power failure were, in some cases, being denied payment.

One carrier that was refusing payment over power outages told Gormley that she wasn't alone: about 80 percent of independent agencies had the same issues as she did with denials of OPPF claims.

Sheri Wilson, national property claims director for Lockton Cos. in Dallas, saw post-Sandy claims for everything from large distributors that lost business when New York's ports were closed, to Mom & Pop shops that lost business due to power failure.

“In our book of business, I didn't see clients that did not carry BI,” Wilson says. “While they had all the right coverage in place, they didn't have the right property-damage cover in place,” she says. “After Sandy, I have the gut feeling that every risk manager will look at it differently.”

Yet, she says, Lockton's agencies won't be invoking the spirit of Sandy when trying to convince new clients to consider BI and its endorsements.

“It's still very raw emotionally for a lot of people. It's like 9/11: you don't talk about it,” she says. “Another year from now they might look at it differently.”