Small US businesses hit by last year's natural disasters often suffered doubly since they did not have the right kind of insurance to cover their losses, according to a report Tuesday.
Small companies that suffered from the historic hurricanes and wildfires in 2017 largely lacked business interruption insurance that would cover for power failures or loss of customers in a disaster, according to the joint report by four regional Federal Reserve banks.
Of the firms affected in the continental United States, 65 percent cited power outages as the source of their financial losses, yet only 17 percent of that group had business disruption insurance, the report found.
Another 38 percent cited flood damage and 36 percent had wind damage, yet only 16 percent had flood insurance coverage and only 21 percent had wind insurance.
"We find that although most firms that experienced disaster-related losses did have insurance, the types of coverage appear to be mismatched to the actual damage experienced," Emily Perlmeter, community development advisor at the Dallas Fed, told reporters.
"This leaves critical gaps that need to be addressed and better understood."
The report was prepared by the Federal Reserve banks of New York, Dallas, Richmond and San Francisco. A separate study on the situation in Puerto Rico, which was hit by two powerful hurricanes, will be released later this year.