Clark Schweers says companies are just beginning to “wrap theirarms around” the vast business-interruption implication left behindby Superstorm Sandy.

Schweers is a managing director for BDO Consulting, a providerof litigation, investigation, risk advisory and other services formajor corporations and insurance companies (among others). As thehead of the firm's business-interruption and insurance-claimspractice, Schweers says he's already talked to companies—and eachare just starting the process (if it's even possible) of accessinglosses due to the vast disruption caused by Sandy.

“It's mind-boggling; that's what they are telling me,” Schweerssays of what he's hearing from the companies—many of them belongingto the Fortune 500—about their initial look at what Sandyhas done to business.

“It's not unusual for a large retailer to have 40, 70, 100-plusproperties, and many of them could be affected,” he explains. “Thestorm was so big and the damage was so widespread. And it's not allone thing. You have wind damage and power outages and flooding andsnow—or a combination of those—affecting different locations aswell as customers and suppliers.”

Possibly within the next week it will be made clear howinsurance policies will respond to losses depending on the specificterms and conditions of each contract. But Schweers says hedefinitely anticipates disputes over deductibles even thoughregulators in some of the hardest hit areas have told insurers theycannot use hurricane deductibles—which are based on a percentage ofinsured value, rather than a flat deductible.

“That's their position, but from the attorneys I have spoken to,they clearly think disputes will arise if there's enough money atstake,” Schweers says. “We could be talking about a claim for $500million. There's a lot riding on that decision.”

Another issue yet to be determined is whether companies'policies are occurrence-based or location-based. In occurrence, oneevent—in this case Sandy—would be considered a single occurrencecausing a loss to all locations. But with a location-basedapproach, separate deductibles could be applied to losses at eachlocation.

“Companies are consulting their legal counsel, asking how thisis all going to shake out,” says Schweers, who advises clients tostay in communication with insurers and collaborate with them.Companies should give their insurer immediate notice of a potentialloss and, after several weeks, companies should provide insurerswith a range of the magnitude of losses in order for the insurer toproperly reserve.

“This is critical to the end result: the end settlement,” hesays. It could take six to 12 months to reach a settlement, butit's not unusual for a large account to take up to 24 months to besettled.