Well, weÂ’ve already got the first opportunistic government official filing suit against the insurance industry in the wake of Hurricane Katrina.

The attorney general of Mississippi sued five major insurance companies on Thursday, alleging that they're cheating Hurricane Katrina survivors.

The five companies are divisions of Nationwide Mutual Insurance Co., State Farm Fire and Casualty Co., Allstate Property and Casualty Co., the United Services Automobile Association and Mississippi Farm Bureau Insurance.

The suit is the opening shot in what's expected to be a protracted legal battle over homeowner and business claims after the nation's most devastating storm.
Attorney General Jim Hood sued in state court in Jackson, Miss., alleging that the insurance companies are skirting claims by insisting that damage to homes was caused by flooding, which isn't covered under homeowner policies.

"Is it right to write in the fine print a provision that takes away the reason for the contract in the first place?" Hood asked in an interview after filing suit. "You can't put this stuff in fine print and bankrupt half the coast and say, `Oh well, they should have known.'"

Interestingly, one of these companies is my insurance company, so I am familiar with their practices. When I bought my house, four blocks from Galveston Bay, I was EXPLICITLY told that the policy didnÂ’t cover flood damage. I was EXPLICITLY told I needed to get flood insurance to cover such damage. So when the next hurricane rolls up the Texas coast towards Houston, IÂ’m covered, whether the water comes from above through a hole in the wall or roof (homeownerÂ’s policy) or from below as the water rises (flood policy).

For whatever reason, these people didnÂ’t get the message. Now they want their policies to cover excluded damage, and you have a politician trying to get money out of these companies on behalf of those who did not act in a proactive manner. Look at Mississippi.

FEMA officials have acknowledged that 60 percent of the affected property owners in Katrina's zone of destruction may lack federal flood insurance. To rebuild, they'll have to take out low-interest government loans.

For the 40 percent who have flood policies, the federal government pays claims of up to $250,000 for residences and $500,000 for commercial property. It doesn't cover living expenses until a home is rebuilt.

In Mississippi, there were only 42,320 flood policies in place at the end of last year, a fraction compared with a hurricane-prone state such as Florida, with more than 1.8 million flood policies.

Ahhhhhhh – I see. Folks decided to save a buck, figuring that they would continue to dodge the bullet. Now they want someone else to pay for their choice not to spend the money to protect themselves. Got it.

Toss this suit out of court – with extreme prejudice. And sanction those who filed it.

Posted by: Greg at 12:12 PM | No Comments | Add Comment
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