Contour Enthusiasts Group Archives Forums General Common Interests Katrina: Legal Fallout in Mississippi

(Mississippi) Attorney General Jim Hood today(9/16) announced that his office has filed a civil action against the insurance industry seeking to declare void and unenforceable certain rovisions contained in property casualty insurance policies issued to Mississippi Gulf Coast residents excluding coverage from damage caused by Hurricane Katrina.

The Complaint asks the Court to declare that certain insurance contract provisions are
void and unenforceable as the same are contrary to public policy, are unconscionable, and
are ambiguous. The provisions at issue attempt to exclude from coverage loss or damage
caused directly or indirectly by water, whether or not driven by wind. The Complaint
states that these provisions should be strictly construed against the insurance companies
who drafted the insurance policies and their exclusions. The Complaint also states that
the issuance of such insurance policies violates the Mississippi Consumer Protection Act.

The Complaint also asks the Court, among other things, to enter a Temporary Restraining Order to immediately stop insurance companies from asking property owners to sign documents stating that their loss was caused by flood or water as opposed to wind, and to stop using water exclusions to deny or reduce coverage for hurricane damage or loss. The Court is also being asked to enter a preliminary and permanent injunction with regard to
these same matters.

The above was copy and pasted from an offical statement, released last Friday and can be referenced here.

To sum things up though, here's what going on that is causing all this...

1) Insurance companys are stating that they are not paying any flood claims for the homes destroyed during Katrina, because of the wording within the flood insurance policies. Reason? Well, within these policies the definition of a flood does not cover any damage caused by a storm surge or "wind driven water". The MS AG is asking the insurance companys to dismiss this "fine print" within their policies.

2) Insurance company adjusters are asking some customers to sign a wavier, without fulling explaining what they are signing, in exchange of the adjuster writing the customer a check, on the spot, for a few thousand dollars. After the customer signs this wavier, of course, they have no benifits what so ever and left with a $200,000 pile of sticks and a $3000 check in their hand.

The actual lawsuit can be veiwed here.

So... What does everyone think??

I hope ppl start shooting their insurance agents.
That is wrong on so many levels.

Thats bs. I hope the insurance companies have to pay up. You buy flood insurance, it shouldn't matter where the water comes from... you have been 'flooded.' As far as signing a waiver, thats a low blow...

As someone who has to ante up for flood insurance every year because a tiny corner of my property is on a flood plain, I'd be mighty pissed if my house got flooded and I wasn't covered, regardless of reason.

On the other hand, shame on me for not reading the fine print.

But overall, if every insurance company's policy contains that loophole, that means that there's no way anyone could possibly obtain flood insurance. IMO the law will therefore probably fall on the side of the policyholders.

The foolish man who built his house upon the sand......

insurance companies are a racket. They ream you for mucho $$$ and then when something happens, they change all their "policies" to avoid having to pay up. WTF does "flood insurance" cover then? a leaky toilet?? if there is no storm surge or "wind driven" water...then where's the flood going to come from? We talking some noah's ark type $hit here?? ludicrous...

they denied me, and i'd be at their doorstep with a bucket of gasoline and a match.

This kind of litigation is why insurance rates skyrocket. Those people took the risk, bought insurance knowing what was and what was not covered, now they want to make an endrun around the rules? No, I don't think so.

Flood insurance is coverage by the federal government. No private insurance company covers flood damage.

Therefore, if you have flood insurance, whether or not the private insurers consider the damage to be "flood" related is irrelevant.

I need to see a case by case basis to have a real opinion.

Number 1 I have no problem with. If a homeowner doesn't buy flood insurance that their problem. Hurricane insurance and flood insurance are two entirely seperate things, any homeowner should know that. In fact I'm pretty sure that the lienholder on your mortgage makes that very clear when buying your house if you live in an area like that.

A private insurance company doesn't get to pick the definition, they can't 'waive the fine print', the definition of a flood is determined by the federal government, who is the only person that provides flood insurance, and the only entity that can pay out on flood claims. There's a reason that fine print is in there -- it outlines where a private entities responsibility stops and the government's responsibility starts.

Besides the point that any company should not have to 'waive the fine print' because consumers are too ignorant to actually read it. No matter what issue we're talking about. Your homeowner's insurance makes it clear it doesn't cover natural disasters. Your hurricane insurance makes it clear it doesn't cover flooding. And your flood insurance makes it clear it doesn't cover hurricanes.


Number 2 is, of course, utter crap and people doing that with the intention to mislead and/or defraud should be drug out in the streets and shot. And, though I don't doubt that it has occured, I wonder just how prevalent such activity really is. A company knows the kind of coverage this story is getting, any sort of negative press like that would be economic suicide. They're not that dumb.

There is also an issue that alot of people don't know about, or really ever understood (which I agree is their fault to begin with), is Flood Insurance.

But the one thing that we have really been hearing a lot of is the fact that a whole lot of people south of HWY 90, actually south of the "railroad tracks" where not even required to carry Flood Insurence because their homes were not declared in flood zone.

Remember, the definition of a flood did not include the term "wind driven water", aka storm surge. One local leader is action for the two terms to be used together.