- The Washington Times - Thursday, September 22, 2005

WAVELAND, Miss. — Henry and Jacquie Reynolds have been living in a tent pitched on the asphalt parking lot of a destroyed Kmart store here since their house was leveled by Hurricane Katrina three weeks ago.

Mrs. Reynolds, 61, has heart disease and diabetes, and Mr. Reynolds, 64, a retired Marine Corps sergeant, has brain lesions from exposure to Agent Orange during tours in Vietnam.

The couple thought the Kmart parking lot was as good a place as any to set up camp because it is right next to a large hospital tent being run by volunteer doctors.

Like thousands of middle-class families whose houses were demolished by the storm, the Reynoldses are at the center of the struggle of homeowners and Mississippi’s government with insurance companies that has come to define much of Katrina’s aftermath.

As they wait for the arrival of a free mobile home promised by the Federal Emergency Management Agency (FEMA), the couple is trying to cope with news that their wind-and-hail insurance policy does not cover what insurers are calling “flood damage” caused by the massive surge of seawater that accompanied Katrina.

“They finally looked at the house yesterday,” said Mrs. Reynolds, adding that despite the roof having been torn off by wind, the insurance-policy adjuster said “it’s flood damage.”

“I said, ‘No it’s not flood,’” Mrs. Reynolds said, adding that her son was in the house when wind “blew the roof off.”

The wind-versus-flood dispute escalated last week when Mississippi Attorney General James Hood filed a lawsuit in state court accusing five major insurance companies — including Allstate, State Farm and the United Services Automobile Association (USAA) — of trying to trick policyholders out of compensation.

“All that the people have left is hope, and I’m not going to allow an insurance company to wrongfully take that hope away,” Mr. Hood said of the suit, which seeks to “immediately stop insurance companies from asking property owners to sign documents that their loss was caused by floodwater as opposed to wind.”

Insurance agents and industry officials say the suit is politically motivated. “The state is doing it to look better or to divorce themselves from any responsibility to help these people,” said one policy-claims adjuster, who spoke on the condition of anonymity.

Julie A. Rochman, senior vice president of the American Insurance Association, the leading Washington lobby firm for insurance companies nationwide, said the “litigation over wind-versus-water damage is not new.”

She said “some of that litigation is politically motivated and some is genuinely motivated by a desire to help people who are surprised that they are either uninsured or underinsured is also not unusual.” Mrs. Rochman added that similar lawsuits were filed after every major U.S. hurricane in recent history.

“But we should be very clear that homeowner policies generally and historically speaking do not cover flood,” she said.

Private insurance companies like those named in the lawsuit typically don’t offer their own flood-insurance policies. While the companies oversee them, the policies fall under the domain of the National Flood Insurance Program (NFIP), the post-disaster payouts of which are controlled by FEMA.

Homeowners covered by both private and federal insurance say the private storm insurance has proven useless after the hurricane.

Billie Shook, whose three-bedroom home in Gulfport, Miss., was reduced to a concrete slab by Katrina, says that in addition to a $960-a-year wind-and-hail policy through USAA, she also paid $430 a year for flood insurance through NFIP.

Mrs. Shook said a USAA claims adjuster this week told her the damage to her home was caused by floodwater, not wind, so she shouldn’t expect to receive much protection from her $960-a-year-policy.

“I’ve been paying a thousand dollars a year for wind-and-hail insurance and it’s no good,” Mrs. Shook, 53, said. “The federal flood program is the only thing they’re wanting to pay.”

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