- The Washington Times - Thursday, September 15, 2005

JACKSON, Miss. (AP) — Mississippi yesterday sued insurers to force them to pay billions of dollars in flood damage from Hurricane Katrina, saying standard insurance polices have led homeowners to think 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.

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

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

He asked the Hinds County 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.

About three in 10 houses in disaster-struck portions of Mississippi and Alabama had flood insurance, according to Federal Emergency Management Agency estimates.

Allstate Property and Casualty Insurance, one of five major insurers named in the lawsuit, issued a statement saying it was unfortunate the suit had been filed so early in the recovery process.

“The fact is flood insurance protection has been offered by the federal government for nearly four decades precisely because flood damage is not covered by private insurers like Allstate,” said spokesman Michael Trevino.

Katrina destroyed more than 68,000 homes, apartments and condominiums in the state’s six southernmost counties, and caused major damage to about 65,000 residences, according to a preliminary survey by the American Red Cross. Many homes were destroyed by an up-to-30-foot wall of water driven ashore by the hurricane’s Category 4 winds.

Duncan Noble Jr., a home builder and real estate agent in the coastal town of Gautier, said he has talked to people who live as far as two miles inland whose homes were flooded in Katrina. They didn’t have flood insurance because their homes were not in the flood plain zone that was set after Hurricane Camille in 1969.

“It’s just mind-boggling the tens of thousands of people who have got homes that flooded without any flood insurance,” Mr. Noble said.

In his lawsuit, Mr. Hood said residents and property owners on the Mississippi Gulf Coast bought standard policies from the defendants “for the primary purpose of insuring against any damage that could possibly result from hurricanes originating from the Gulf of Mexico.”

The suit says the flood exclusions violate state public policy, contradict common law and are an unfair or deceptive trade practice.

In addition to Allstate, the suit names the Mississippi Farm Bureau Insurance, State Farm Fire and Casualty Co., United Services Automobile Association, Nationwide Mutual Insurance Company and other unidentified insurers unknown to the state who offer similar policies.

Mr. Hood said many insurers were “trying to do the right thing down there. They are trying to pay off what they owe. Some are not. Some are trying to use the fine print to get away [from paying claims].”

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