judge rules in favor of insurance companies over Katrina flood damage...

[Renegade7]

pigs...

GULFPORT, Miss. - A federal judge ruled Tuesday that an insurance company’s policies do not cover damage from flood waters or storm surge in a decision that could affect hundreds of upcoming cases related to property damage from Hurricane Katrina.

U.S. District Judge L.T. Senter Jr. ruled that a Mississippi Gulf Coast couple cannot collect damages from storm surge caused by Katrina because Nationwide Mutual Insurance Co.’s policies do not cover wind-driven water damage.

Senter Jr. said Paul and Julie Leonard of Pascagoula could be compensated for damage that they could prove was caused by high winds, however.

Story continues below ↓ advertisement

“Almost all the damage to the Leonard residence is attributable to the incursion of water,” Senter wrote in the 13-page decision.

Senter’s ruling could set a precedent for hundreds of other court challenges to the insurance industry for denying billions of dollars in claims after the Aug. 29 hurricane ravaged the coasts of Louisiana and Mississippi.

Although Senter ruled that Nationwide’s policies do not cover damage from storm surge, the judge also concluded a key policy provision the company has used to deny coverage is ambiguous.

Nationwide and other insurers say their homeowners policies cover damage from a hurricane’s wind, but not in cases where it resulted from a combination of wind and water.

“This reading of the policy would mean that an insured whose dwelling lost its roof in high winds and at the same time suffered an incursion of even an inch of water could recover nothing under his Nationwide policy,” he wrote.

“From our perspective, it lifts a very large cloud of uncertainty that has been hanging over the insurance market of the Gulf Coast,” Joseph Annotti, spokesman for the Property Casualty Insurers Association of America, said in reaction to the ruling. “A healthy insurance market is absolutely key to a rejuvenated economy down there.”

Shares of most property and casualty insurers rose following the ruling, amid a generally surging stock market.

“It’s a favorable first decision for the industry,” said Fox-Pitt Kelton analyst Gary Ransom. “I never really had much doubt that this was the way it was going to work out. There’s a lot of precedent for this. It’s not like we’re interpreting these contracts for the first time.”

The Leonards had estimated the total damage to their home at $130,253. They said $47,365 in damage was caused by wind. Nationwide paid only $1,661, blaming the remainder on the storm surge.

The couple’s attorneys had asked for more than $158,000 for the damage to the house and its contents, plus interest and attorneys’ fees and expenses. Senter, however, ruled that Nationwide only owed the Leonards about $1,228 more than what the company already has paid them for wind damage.

Both sides claimed victory in the wake of Senter’s ruling.

“The Leonards did not win as much money as I hoped they would have, but they won this case,” said one of their attorneys, Richard “Dickie” Scruggs. “It’s always great to get a win in the first game of the season, whether it’s by one point or 30 points.”

Paul Leonard, a police lieutenant, acknowledged that an extra $1,228 only covers a fraction of the repair costs for his home, but he also considered Senter’s ruling a victory.

“I believe anybody in a civil trial asks for the moon and is able to live with what they get,” he said.

The Leonards claimed a Nationwide agent, Jay Fletcher, told them they didn’t need flood insurance.

Senter rejected the Leonards’ claim that the agent’s alleged assurances make Nationwide liable for damage from both wind and water. Paul Leonard mistakenly inferred that his policy covered water damage, the judge ruled.

“Fletcher did not materially misrepresent the terms of the Nationwide homeowners policy to the Leonards, and Fletcher did not make any statements which could be reasonably understood to alter the terms of the Nationwide policy,” Senter wrote.

The couple’s lawsuit was the first among hundreds of Katrina insurance cases to be tried since the storm slammed into the Gulf Coast nearly a year ago, demolishing tens of thousands of homes.

Senter presided over an eight-day trial without a jury last month. He is hearing virtually all the Katrina insurance cases in Mississippi, so his ruling will be scrutinized by thousands of Gulf Coast homeowners as well as the nation’s top insurers.

© 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

[webnarc]

pigs...

I think pigs would pay up. Insurance companies are a little lower on the food chain.

After this, I wonder if any of those destroyed areas will return to normal. I can't see the people going back.

[ragemdw]

This is a good thing because we all end up paying for it in the long run instead of ppl collecting ridiculous amounts of money.

I feel bad for them and all but hey i dont want my homeowner insurance to be extremely high.

And this is why I will never live in hurricane country!!

[Renegade7]

This is a good thing because we all end up paying for it in the long run instead of ppl collecting ridiculous amounts of money.

I feel bad for them and all but hey i dont want my homeowner insurance to be extremely high.

And this is why I will never live in hurricane country!!

I can't tell if you're being serious or not, so I'm going to let it go and assume you were joking.

[Larry]

This is a good thing because we all end up paying for it in the long run instead of ppl collecting ridiculous amounts of money.

I feel bad for them and all but hey i dont want my homeowner insurance to be extremely high.

And this is why I will never live in hurricane country!!

I guess your definition of "ridiculous amounts of money" is "what they lost".

Now, as a person who's parents have owned oceanfront property in Florida, I well understand that you need homowners insurance and flood insurance.

OTOH, I've seen people destroyed by that "wind and water" language before.

If a storm turns your house into a pile of lumber, and the debris gets rained on, then gee, you're not insured, because it got wet.

Now, the article doesn't say. If, say, their home was physically intact, but everything got ruined by water, then gee, you should've bought flood insurance. Just because I've had neighbors get shafted by those weasel words doesn't prove that this is one of those cases.

(I also have trouble believing in an insurance salesman telling people they don't need more insurance. Seems hard to swallow. Did he tell them they were covered, or did he tell them "Heck, what're the odds of the water getting that high?")

-----

I'll also point out to the folks who're celebrating that "now my insurance will be cheaper":

All this court decision means is: The insurance companies won't pay for it, the taxpayers will.

[Enter Apotheosis]

This is a good thing because we all end up paying for it in the long run instead of ppl collecting ridiculous amounts of money.

I feel bad for them and all but hey i dont want my homeowner insurance to be extremely high.

And this is why I will never live in hurricane country!!

Honestly, relief will get to these people in some form or another and everyone else will have to pay for it somehow. If the insurance companies deal with it, then compensation should be a bit more fair than they would through general government relief programs. Seriously, you just kind off as kind of ignorant and selfish :doh:

[fight_on_til_you_have_won]

Crooks. That really pisses me off. :redpunch:

The best we can do as consumers is not do business with Nationwide and other insurance company that uses this ruling to avoid helping their customers.

[SkinsD]

I think it's easy to bash insurance companies but you guys just don't understand the business. These companies usually walk the line of profits and bankruptcy. If insurance companies paid claims they didn't have to pay we all would not have insurance - I can guarantee you that would be a lot worse. I've worked in insurance for years and I can assure you we often bend the rules to pay a claim if we can, but cases like this make it impossible.

It comes down to that the consumer is responsible to carry the insurance they need. If you don't want to pay for flood insurance should the rest of us have to pay for your house when it gets flooded?

[Larry]

Oh, I well understand that the insurance "business" is perhaps the most regulated business in the US.

OTOH, I'll also point out that, for example, the reason insurance policies are so confusing and have so many vague clauses in them is because the insurance industry wants it that way.

Face it: Insurance is one of those businesses where the customer often doesn't see what he's bought untill decades after he buys it. That creates a lot of opportunities for deception.

To me, for example, the types of policies offered should be regulated somehow, to allow comparason shopping. A "homeowners" policy would cover all (non-intentional) damage to a home, regardless of cause. Maybe all of them would also include built-in appliances like dishwashers and water heaters. Maybe insurance for furnishings and contents would be seperate.

But, needing one policy for "homeowners", one for flood, one for wind, and who knows which one covers what we in Florida like to refer to as "raining sideways" is nothing more than an excuse for deceptive marketing.

(And, frankly, the public has an interest in both maintaining the solvency of the insurance industry, and making it easy for consumers to comparason shop, because under the present cluster-something, there's way too many people who're just "taxpayer insured".)

(And no, it's not just folks with beachfront land in Florida. I suspect the feds pay out a bunch each year to folks who build riverfront property on the Mississippi, or on California mud-slopes, or, let's face it, just about anywhere else thay have this thing called "weather". (We can't all live in Phoenix. ))

[The 12th Commandment]

It's always in the fine print. They are in business and as distastful as they can be insurance is something we have to have.

People who build anywhere where natural disasters are to be expected (hurricanes, earthquakes and floods) should be required to carry the full slate of insurance. I think it should be considered part of the cost of living in those particular areas. They certainly have no case asking the rest of the us to pay for it when what we know is going to happen...does. It ticks me off that we continually seem to do just that.

During the last floods in the Mississippi Valley weren't there stories of poeple who were rebuilding with relief funds houses that had already been rebuilt at least once? That's just stupid.

[TheDoyler23]

I'd have the whole spread of insurance if I lived BELOW sea level, near where a body of water could flow into my house, or where the hurricaines come charging thru each year.

[mlfchelle]

This is my first post - long-time "lurker," but I had to respond to this one. I currently work for one of the major insurance companies and I can tell you first hand that the majority of catastrophe related claims are paid above and beyond what could be expected. The problem is when multiple events affect a claim - for example, a hurricane drives flood water. In those cases, it's very difficult for an adjuster to determine which portion caused what damage.

While I sympathize with the people affected by the Katrina catastrophe, I've seen numerous examples in the company I work for where the claim was covered although at least a portion of the damage was caused by flooding.

I've seen several responses where regulation is discussed. One thing most consumers don't realize is that the insurance industry is one of the most highly regulated industries. HOWEVER, the regulation is done at a state level, not federal. This means that every single state differs in how insurance companies are allowed to write coverage and word policy language. Most companies have been lobbying for federal legislation for decades because it would simplify the process and in turn, reduce premium for customers.

I apologize for the length of this post, but wanted to provide an "inside" view of the impact these decisions can have.

[DeanCollins]

Oh, I well understand that the insurance "business" is perhaps the most regulated business in the US.

To me, for example, the types of policies offered should be regulated somehow, to allow comparason shopping. A "homeowners" policy would cover all (non-intentional) damage to a home, regardless of cause. Maybe all of them would also include built-in appliances like dishwashers and water heaters. Maybe insurance for furnishings and contents would be seperate.

But, needing one policy for "homeowners", one for flood, one for wind, and who knows which one covers what we in Florida like to refer to as "raining sideways" is nothing more than an excuse for deceptive marketing.

(And, frankly, the public has an interest in both maintaining the solvency of the insurance industry, and making it easy for consumers to comparason shop, because under the present cluster-something, there's way too many people who're just "taxpayer insured".)

))

The prices in FL are also regulated so the only comparison shopping to do is pick the best company that will take you. I doubt very seriously that the

agent that sold those people their policy neglected to explain them that

the hurricane (wind) coverage, that came with their homeonwers policy, does not cover flood. It's very tempting to decline a flood policy with the perception that if the hurricane is bad enough to push a storm surge the wind will do enough damage (tear the roof off) so that homeowners policy will cover the damage. I wanted to believe it myself till an agent told me that it was a gamble that I probably wouldn't win. So I pay about $300 per year for $180,000 building/ $80,000 personaly property flood insurance. I'm only a block from the water but I'm in flood zone "F" (15' elev.)

The people in that suite may have been in a flood zone "A" or "B" and their premium would've been more like $600-$1000 a year but still chances are they knew the risk, took the chance and lost. So you say "what if they can't afford the extra flood insurance". Then get off the beach biatch!

[Seabee1973]

I think you have 2 different languages people that did have fllod insurance arent getting reembursed because they say its a surge caused by high winds. To be carefull you need all types of insurance i guess

[Kilmer17]

This is great news for everyone.

These people did not have the insurance they needed to cover the hazard. That's not the fault of any insurance company. It's the fault of the policy holder and possibly his/her agent.

Homeowners Insurance does not cover Flood Damage. It's spelled out in every policy. It's no different than asking why your homeowners insurance doesnt cover your car that was damaged in a hurricane.

I dont feel bad for the people if they made this choice. I do feel bad if their agent misinformed them. And in that case, they should sue the Agent and his/her E&O carrier.

It's convenient to bash the big bad insurance companies. But you should really deal with the facts of the case.

[Kilmer17]

Oh, and another thing.

Here is a list of things that your homeowners insurance WILL NOT COVER.

Damage caused by any of the following

-Acts of terrorism

-Herding Animals

-Military movements

-War

-Nuclear disasters, whether war or peace.

Carry on.

[Destino]

Oh, and another thing.

Here is a list of things that your homeowners insurance WILL NOT COVER.

Damage caused by any of the following

-Acts of terrorism

-Herding Animals

-Military movements

-War

-Nuclear disasters, whether war or peace.

Carry on.

Herding animals made me laugh.

[Kilmer17]

It's always good for a laugh with clients.

It's true though. If a herd of Buffalo decide to run through your house, you policy wont cover the damage.

[SkinsD]

Herding animals made me laugh.

Crazier things have happened. I once had an insured who hit a camel in downtown DC - a friggin camel. It ran away from a nativity scene! Dude had a brand new BMW and he killed the camel. Apparently a lot of kids were crying.

Oh and we did cover the damage. He sued the church for injuries too.

[Kilmer17]

Crazier things have happened. I once had an insured who hit a camel in downtown DC - a friggin camel. It ran away from a nativity scene! Dude had a brand new BMW and he killed the camel. Apparently a lot of kids were crying.

Oh and we did cover the damage. He sued the church for injuries too.

I see youre in FredVegas. Are you with Geico? Or in an Agency?

I went to Mary Wash.

[SkinsD]

I see youre in FredVegas. Are you with Geico? Or in an Agency?

I went to Mary Wash.

haha FredVegas - man this town bites.

I was with Geico at the time, now work for Selective insurance in Richmond.