Mississippi Sues to Force Insurers to Pay All Hurricane Damage

[TacticalPeek]

Miss. Sues to Force Insurers to Pay All Hurricane Damage

By Duncan Mansfield Associated Press Writer
Published: Sep 15, 2005


JACKSON, Miss. (AP) - Mississippi on Thursday sued insurers to force them to pay billions of dollars in flood damage from Hurricane Katrina, saying standard insurance polices have led homeowners to believe they are covered for all hurricane damage, whether from high winds or storm surges.

To deny coverage to those whose homes were wiped out by the storm surge, but lacked flood insurance, is "taking advantage of people in the most dire straits," said Attorney General Jim Hood, who filed the lawsuit against five major insurers.

"We intend to ... make sure the insurance companies pay all that they owe these people on the coast," he said.

Hood said storm surge damage has been estimated at $2 billion to $4 billion.

He asked a Chancery Court to void provisions in the policies that attempt to exclude from coverage losses or damages directly or indirectly caused by water, whether wind-driven or not. He said he would seek a restraining order next week pending a full hearing.

more
http://ap.tbo.com/ap/breaking/MGBZ6MOQNDE.html

[TaleWgnDg]

1. . . . more from JURIST NEWS . . .

Mississippi sues insurance companies over Katrina payouts

Bernard Hibbitts, Thursday, September 15, 2005, at 9:40 PM ET

(JURIST NEWS) Mississippi Attorney General Jim Hood (official website) announced Thursday that his office had filed a civil suit (complaint, pdf format) against five national insurance companies - Mutual Insurance Co., State Farm Fire and Casualty Co., Allstate Property and Casualty Co., the United Services Automobile Association, and Mississippi Farm Bureau Insurance - seeking a declaration that provisions in their insurance contracts avoiding liability for property damage of the type inflicted by Hurricane Katrina are null and void. In a press statement (pdf format) Hood said:

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 state is also asking for a temporary restraining order to block the companies from having insurance claimants sign declarations that their losses were caused by flooding or water rather than wind, thereby limiting their ineligibility for compensation. Said Hood, "I'm hopeful that next week we will be able to stop unscrupulous insurance adjusters from requiring people to sign away their rights to ‘flood damage’ claims in exchange for a significantly smaller amount which will be used for immediate living expenses. I want to encourage the people to continue to fight and I’ll do everything I can to make sure that insurance companies pay what they owe." AP has more.

Meanwhile in Louisiana Thursday, 14 couples, an individual homeowner and a business launched a legal action against 16 insurance companies in state court asking it to rule that neglect and wind damage caused the levees around New Orleans to break, disqualifying them as an "act of God" traditionally cited by companies as avoiding insurance liability. The plaintiffs are asking to have their suit certified as a class action. AP has more.

. . . more at . . . http://jurist.law.pitt.edu/paperchase/2005/09/mississippi-sues-insurance-companies.php
.

.

Hhhhmmmmm, I wonder . . . how successfully will these legal challenges be? It will take years in court b4 there will be fruitful results, if any. Or is the Mississippi Attorney General merely ploying politics? Is he going to run for Governor? Let's not deliver more tragedy to the residents of Mississippi . . .
___________

edited for minor typo
.

[fearnobush]

2. So the repukes gonna sue themselves? Yeah right.

Trial lawyers, damm lawyers taking all our money from those poor folk we ripped off. :sarcasm:

[TaleWgnDg]

3. Hey, uuuummmm, as a lawyer, I am merely saying that . . .

I do not know whether these court challenges are based on appropriate Louisiana law and whether such challenges will be successful, or whether the Mississippi Attorney General is merely using his office during this time of tragedy as a steppingstone for higher political office. However, if the AG is successful and he gets more money damages or other positive results for Mississippi homeowners, then terrific. Bottom line is that the residents of Mississippi DO NEED HELP not more tragedy and empty promises.

[VegasWolf]

21. My guess is that the insurance companies would not want a JURY trial

held in Southern Mississippi!!!

[Toots]

32. Well a law suit like this will just "end" home owner's insurance in MS

Insurance Companies are not forced to write anyone a policy. They, like any business, will just drop accounts that cost money. They are in business to make money not take care of people. I would bet anything that most of these insurance companies are major GOP contributors. They operate like Republicans anyway.

[saigon68]

41. GOOD ANALYSIS

They are only in it to make money. No rebuilding there.

No co. in its right mind will do business there again.

Ergo no mortgage company will operate in Bangladesh without proper mortgage/homeowners insurance.

[Sgent]

4. First off these claims

are not subject to LA law, since this is the MS Atty General dealing with foriegn & domestic corp.s in MS, in a MS Court. In fact, if you read the complaint, he (smartly) did not bring forth any complaints based on federal law either.

I'm not sure I agree with it, but it is a fairly ingenious motion. Since Jim Hood is the Atty Gen. of the state, the courts will give him a great amount of deference. They will most likely give him the temporary injunction he requests.

This will be interesting...

[TaleWgnDg]

15. How *kind* of you to so zealously ID my typo . . .

the word "Louisiana" for the word "Mississippi" . . . What else do you do? Eh.

[jody]

5. Any awards will be appealed and probably reduced to a token amount if

supreme courts are pro business. There are probably enough ambiguous small print limitations in insurance policies to allow supreme courts to minimize insurance company losses.

The victims will probably bear most of the loss and insurance companies will use any losses they have to rationalize increasing insurance premiums as much as they can. :shrug:

[BooScout]

6. He's posturing.....

....in order to run for higher office. This happens often after hurricanes with storm surges. Insurance policies are contracts and it's basic contract law. He may even win initially especially before a jury but it would more than likely be reversed on appeal.......but he'll get what he wants. Publicity.......and at tax payors expense I might add.

[DFWdem]

7. Another thread in GD on this topic here

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x4791880

[NeoConsSuck]

8. Insurers sued to force them to pay storm-surge coverage

Mississippi Attorney General Jim Hood sued five insurance companies Thursday to force them to pay for storm-surge damage related to Hurricane Katrina.
The complaint, filed in Hinds County Chancery Court, claims that Allstate, State Farm, Nationwide, USAA and Mississippi Farm Bureau policies "attempt to exclude coverage for storm-surge damage" caused by the hurricane.

This is "an unfair or deceptive trade practice" under state law, Hood says. Hood also asked for a temporary restraining order to prevent insurers from paying policyholders to get them to sign waivers saying they have flood damage.

Homeowners' policies typically cover wind and sometimes wind-driven rain damage. Government-issued insurance covers flood damage. What's unclear is whether hurricane-caused storm surges are covered by homeowners' policies.

http://www.usatoday.com/money/industries/insurance/2005-09-15-katrina-insurance-lawsuit_x.htm

Trent Lott is probably flipping out right now. He lost a house, but then again, he's always been a whore for his corporate masters. Oh, what is a corporate friendly right wing puke supposed to do in a situation like this? LOL!

[merwin]

9. This is why we need tort reform! Worthless displaced scum trying to cheat

the insurance companies out of their hard earned cash!

[Democrats_win]

10. Greed is God. Why do you think they prey so much (on the poor).

[lynne]

11. I don't see this happening -

as home, dwelling and property policies have excluded flood damage since - well - forever. Same for wind driven rain. This exclusion is consistent company to company and state to state. It's not like its a new exclusion and many agents and companies will periodically send out marketing flyers encouraging their insureds to purchase flood insurance as their home policies do not provide coverage for it.

I see this as mere grandstanding at the expense of the victims themselves. Not to mention a waste of time and money.

[tammywammy]

13. I agree

My grandfather lives in south-east Texas. He owns his house outright (never had a mortage, paid cash for it). He has flood insurance. He knows that his regular home-owners insurance doesn't cover the flooding.

Heck, I don't live in the flood plain, yet I know that home owner's insurance doesn't cover flooding, and it hasn't for years. And also most, if not all, mortage companies require flood insurance if you live in an area (such as New Orleans) where flooding can be a problem.

If a homeowner lapsed or canceled their flood insurance I feel bad for them, but then this is a consequence of that. Also, they should have read their home owner's insurance carefully, because it will explicitly spell out what's not covered. Not reading your contract, is not an excuse for not knowing what is and isn't covered.

[BooScout]

16. Exactly right.........

And in addition the contract language is pre-approved by the Insurance Commissioner of each and every state an Insurance policy is sold in. There are strict compliance laws in every state and the companies follow them to the letter of the law.

My homeowner's is State Farm.....I get at least 2 brochures a year telling me to review my policy and consider flood or earthquake coverage.

People on the coast are well aware they must have flood insurance and to go without is taking a huge chance.

[mbperrin]

24. Maybe they don't actually follow them to the letter of the law...

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF...
Aetna Fined by Texas for Fraud: "Aetna is among the 21 insurers fined by Texas Department of Insurance Commissioner Jose Montemayor this year for allegedly violating the state's rules on prompt payment of claims."

Aetna Agreed to Pay $470 Million For Defrauding Doctors: "Aetna Inc. has agreed to a $470 million settlement with more than 700,000 doctors who alleged in a class-action lawsuit that insurers wrongly cut payments to them and interfered with their recommended treatment for patients."

http://www.insurancejournal.com/magazines/southcentral/...
According to Texas Attorney General Greg Abbott, the state reached a settlement with Farmers Insurance Group that requires the company to refund an estimated $2.4 million to about 13,000 Texas motorists who may have paid more for vehicle repairs than was required under their policies. The agreement is unrelated to a proposed $117.5 million settlement with the state involving allegations the company deceived homeowners and misused credit scoring data. The AG's office said the unlawful practice known as "betterment" involves supposedly increasing the value of a policyholder's vehicle by paying for repairs with better or newer parts. The state's top attorney noted that companies such as Farmers have routinely reduced the amount to be paid to the motorist for repairs by an amount believed to equal the improved value of the vehicle because upgraded parts were installed, such as new rather than rebuilt transmissions. Under the settlement, Farmers will refrain from deducting for betterment on its policyholders' claims. The company agreed to refund the amount charged for betterment, plus interest, to policyholders who had an auto repair claim paid from Feb. 14, 1996, to the present. Farmers will mail checks directly to policyholders who had electronic estimates that indicated the company made these deductions for betterment. For those policyholders whose deductions cannot be identified though electronic estimates, Farmers will mail notices requesting that eligible persons make a written claim. Farmers will review the written claim file and send a refund check if the file indicates the company deducted for betterment. Farmers agreed that this settlement will not affect its insurance rates. It will also pay $175,000 in attorneys' fees and other expenses to the AG's office.

and about 245,000 other hits on Google for "companies fined by Texas Insurance Board."

My personal experience over the last 35 years has been that companies routinely deny all claims and wait for you to hire an attorney and sue. I've had two homeowner claims and four auto claims in that period and had to sue for each of them, and did get settlements in all cases.

As my dad used to say, "There's a reason no insurance company is located in a poor part of town or in a short building."

I'm always hopeful there is a real burning hell....

[djg21]

20. I agree entirely.

I generly don't think much of insurance companies, but in this case, the policies are crystal clear -- if property owners wish to obtain flood coverage, they must purchase an additional rider. This is not news.

As much as I dislike insurers, I don't think it would be fair require them to provide coverage to property owners who declined to purchase coverage or to pay necessary premiums.

Of course, the issue now becomes whether the damage at issue was caused by wind and hurricane itself (which is generally covered) or the flood, which is not in the abscence of a rider or flood insurance policy purchased by the property owner.

[lynne]

26. An astute adjuster will be able to determine -

- if flood caused the damage or if wind was the initial culprit. The only exception to that may be if the house is missing entirely.

It may be that some dwellings will have a portion of damage from the wind and a portion of damage from flood. The insurance will only pay for the damage caused by the wind in those cases.

NOLA isn't the first time a place has flooded after a hurricane. Hurricane Agnes and the floods she caused in several states in the early 1970's comes to mind. If a lawsuit was able to get an insurance company to pay for flood damage, it would have been done years ago.

[screembloodymurder]

34. Not forever just 200 years.

I don't live anywhere near a flood zone, but I know about the flood exclusion.

[barb162]

35. same here re flood, but that negflect of levee complaint might work

[RUMMYisFROSTED]

12. Haley-lujah!

:chuckle:

[bluedog]

14. people in these states.I wish you luck!

will never get affordable homeowners insurance from any company.....

We in Fl have had most of the top insurance move out and not issue any new clients some have just plain out and dropped coverage ...

let me tell you its so hard to find an insurance company to insure homes in hurricane areas......if one is lucky to get insurance the premiums are sky high ,,

and a person making minimum wage (because of Bacon Davis in NOLA) will not be able to afford them......

.bush knows this and the GOP knows this.......NOLA is going to turn out to be only the white rich peoples disneyland.

[barb162]

38. the insurance companies want to deal with fortuitous losses

not certain losses. If we are having global warming and sea level rising ( which is the case)and people insisting on living on beaches and close to beaches, you can see why the insurers are bailing. They just don't want to be paying for total house losses every few years to the same house. Something has to give on this issue. Personally I would like to see people move a few miles inland to protect their property and lives from hurricanes and let the beaches and sandbars build up or be fortified so that there isn't so much damage. Make that national seashore. You look at Miami, Tampa, etc., and the way highrises are right next to the water in hurricane areas and you shake your head.

I know people who are thinking of getting out of their waterfront properties and they weren't even ever hit. But they were worried a few times the hurricanes might towards them and they'd lose everything. Then you hear other people who got 100% nailed by Katrina and they stand there and say they want to rebuild right back on the beach. Okay they can get hit next year or maybe not 20 years. But there is a high chance they will get nailed again with global warming.
Of course, what happens with all the pricey beachfront real estate? Well, after a hurricane and the property is destroyed, the people move out and it becomes national seashore. This would be a very painful process, but I just don't see another solution.

I wanted to add I am no fan of insurance companies but living on beaches in the SE is almost an accident waiting to happen and will be more so, I think, in the future.

I would also like to see the bayou and swamp areas of Mississippi and LA with no development AT ALL as they offer such important natural hurricane protection.

[verminator]

17. Oct 04: FEMA knew hurricane could flood New Orleans.

OCTOBER 2004:
http://www3.nationalgeographic.com/ngm/0410/feature5/

....Thousands drowned in the murky brew that was soon contaminated by sewage and industrial waste. Thousands more who survived the flood later perished from dehydration and disease as they waited to be rescued. It took two months to pump the city dry, and by then the Big Easy was buried under a blanket of putrid sediment, a million people were homeless, and 50,000 were dead. It was the worst natural disaster in the history of the United States.

When did this calamity happen? It hasn't—yet. But the doomsday scenario is not far-fetched. The Federal Emergency Management Agency lists a hurricane strike on New Orleans as one of the most dire threats to the nation, up there with a large earthquake in California or a terrorist attack on New York City.......

[pitohui]

18. good for him

i'm tired of some being more equal than others

acts of terror & war are specifically excluded by insurance coverage yet the 911 victims received billions in damages anyway from insurers & taxpayers

but we're supposed to siddown & shut up after being victims of a far bigger disaster

what is the difference?

as another poster said, a southern life or loss is apparently worth only 3/5 of a yankee loss or life


in practice apparently it's worth even less than that!

fair is fair

we should be compensated

[lynne]

42. Terrorism WAS NOT EXCLUDED prior to 09/11

- It is now.

[javadu]

19. Mississippi Must Be Run By Liberals

They need to relieve the courts of all the frivolous lawsuits.

[VegasWolf]

22. Good!!! Kick!

[Sgent]

23. If anyone reads the lawsuit

It is not actually based on overturning the Flood coverage as such.

The AG asserts that the insurance was sold to consumers as Hurricane Insurance. He goes on to say that selling "Hurricane Insurance" for a beach front residence and not including flood coverage is a violation of the states consumer protection laws.

He then goes on to ask for a remedy in equity from the court, that the insurance co's live up to what they sold, and cover all hurricane related damages. He claims that to do otherwise is unjust and against public policy.

He's got a long row to hoe, but it maybe that he can do it.

In a somewhat seperate action, he asks for a Temp. Restraining Order to prevent insurance co's from requiring insureds to sign that damages are flood related before recieving an advance on their claims.

[cmd]

25. That's why I think the suit should go forward

Regular homeowner's insurance would only pay for wind damage, Those companies sold the homeowners additional hurricane insurance. All damages from hurricanes should be covered under that contract. Otherwise that additional coverage would be for nothing.

[Laelth]

27. Part of me hopes the ins. companies win.

The people of Miss. need to learn what happens when you keep electing Republicans who, in turn, appoint "freedom to contract" judges. Some contracts are just unconscionable, and they should be ruled unenforceable, as when insurance contracts prohibit coverage for a plethora of reasons. Liberal judges tend to construe contracts against the powerful entities that write them. Conservative judges tend to construe contracts in favor of the literal language of the contract (i.e. in favor of the powerful entities who get to write in all the fine print).

Careful what you wish for, Mississippi, you might just get it.

-Laelth


Edit:Laelth--darned homonyms.

[pitohui]

28. really did you protest after 9-11

when insurers pd billions in uninsured claims as no insurance covers acts of war or terror

or is it only southerners you hold to the exact letter of a contract

just askin

[Laelth]

29. Huh?

I'm confused by your response. Care to elaborate?

:shrug:

-Laelth

[lynne]

30. Terror was not excluded from coverage prior to 09/11 -

- though you can bet that it is now. And we were not at war at that time though war is and was excluded.

If someone drives his truck through your house, it is covered. Same goes for cars, trains and airplanes. Prior to 09/11, excluding terrorism as the root cause for the airplane going into a building was not written into the contract. Hell, I doubt that terrorism had even been considered as an exposure by insurers at that point.

Not anymore . . .

[barb162]

36. it was excluded from business coverage all along, like decades

[Sgent]

31. Not in Mississippi

The judges might be "freedom to contract", but the insurance contracts were approved by George Dale, a moderate D who is the elected insurance commissioner and fire marshal.

George has been generally credited with doing a very good job, and to be honest I think the AG is really out for a publicity run. According to some local general agents here, the insurance companies had just about agreed to cover most of Mississippi's damages w/o a lawsuit.

[Laelth]

33. I asked an attorney I work with ...

... about George Dale, and he agrees with your assessment. Evidently, Dale has been holding the insurance companies' feet to the fire for a while now. Glad to hear it.

But with a Republican governor, you get conservative judges. That was the point I was trying to make.

-Laelth

[Sgent]

39. All judges are elected here

The govenor, other than by endorsing a candidate, has no say on judges at any level. There is no "rejection" or "approval" election, judges have to campaign in their districts and win by popular vote. Judges are often kicked out of office for decisions that might be right, but that disagree with the majority.

[barb162]

37. this still doesn't deal with all the people who had no homeowners

coverage at all; still millions in uninsured losses (the poor I think in NOLA ...50% of them had no coverge)

[TacticalPeek]

40. Hmm. This article is unfair to Hood - as explicated by Media Matters.

Similarly, WSJ does a snow job.

WSJ, AP left out key information in reports on Mississippi lawsuit against insurance companies

In reports on Mississippi Attorney General Jim Hood's lawsuit against five U.S. insurance companies alleging deceptive trade practices for their denial of water damage claims caused by Hurricane Katrina, The Wall Street Journal made only perfunctory reference and the Associated Press none at all to a key element of the case. Hood claims that these companies are offering policyholders immediate funds to cover living expenses only in exchange for signing waivers stating that damage to their property was caused by flooding, which the insurers are claiming is not covered by their policies.

Hood's goal in the suit is at least twofold. He is first seeking a temporary restraining order "to immediately stop insurance companies from asking property owners to sign documents stating that their loss was caused by floor or water as opposed to wind, and to stop using water exclusions to deny or reduce coverage for hurricane damage or loss"; more generally, Hood is asking the court to declare void and unenforceable provisions that "attempt to exclude from coverage loss or damage caused directly or indirectly by water, whether or not driven by wind."

The first two paragraphs of the Journal's September 16 article on the lawsuit read as follows:

Mississippi Attorney General Jim Hood filed suit against five big insurers in that state yesterday, unleashing protest throughout the industry as he seeks to force the companies to pay for flood damage from Hurricane Katrina despite flooding exclusions in standard homeowners' policies.

The suit, filed in state court in Jackson, seeks to override the exclusions. It comes as tens of thousands of Gulf Coast property owners struggle with the cost of rebuilding homes damaged by the wall of water that surged with the hurricane Aug. 29. Standard homeowners' policies typically cover wind and other storm damage, but not flood damage. Flood damage is covered by a government-backed flood-insurance program, but fewer than one in four Mississippi properties in areas most at risk of flooding are insured through the federal program.

Similarly, a September 15 AP article begins as follows:

Mississippi on Thursday sued insurers to force them to pay billions of dollars in flood damage from Hurricane Katrina, saying standard insurance polices have led homeowners to believe they are covered for all hurricane damage, whether from high winds or storm surges.

To deny coverage to those whose homes were wiped out by the storm surge, but lacked flood insurance, is "taking advantage of people in the most dire straits," said Attorney General Jim Hood, who filed the lawsuit against five major insurers.

But here's the problem with the Journal's and the AP's constructions: They imply that the basis for the insurance companies' denial of claims is simply the language in the homeowners' policies. But Hood also alleges that the insurance companies are using these waivers to deny property owners the abiity to claim that the damage to their property was caused by anything other than flooding. He is seeking an immediate order to put an end to these waivers obtained through what he alleges is coercion -- conditioning the receipt of immediate cash, which victims are using to cover living expenses, on property owners' agreeing to sign. The Journal refers to the waivers only obliquely, and only at the end of the article, without noting how they could diminish or erase property owners' claims or how they are significant to Hood's lawsuit and to his argument that the insurance companies are not acting in good faith:

Mr. Hood's lawsuit seeks to prevent any insurer from requiring policyholders to sign documents acknowledging flood or water damage to receive claim payments. In its statement, Nationwide {Mutual Insurance Co.} said any suggestion that it had done this was "unfounded."

Moreover, while allowing Nationwide to dismiss the allegations as "unfounded," the Journal does not explain the basis for Hood's allegations that this is going on in the first place.

In contrast, other print media including The New York Times, The Washington Post, and the Reuters and Knight Ridder wire services prominently reported Hood's accusations that insurance companies are using these waivers as justifications for denying or reducing hurricane victims' coverage.

more
http://mediamatters.org/items/200509170003