Insurance Woes

There is a battle royale going on along the Mississippi Gulf Coast. Hurricane Katrina did a lot of damage and it's massive storm surge was unprecedented, at least in the last 500 years. The federal aid package that was recently passed by Congress includes aid for those who had no flood insurance and lived in areas that were not on even the 100 year flood plains maps. But another issue is at hand, can a storm surge be classified as a flood? That is at the heart of the debate. Is a wall of water driven inland by hurricanes a flood or is it something different? A storm surge is unique.

They and thousands of others are discovering that if they thought they had hurricane insurance, they were sadly mistaken.

There is no ambiguity whatsoever -- I don't know if I can make the statement any clearer than that, said Bob Hartwig, chief economist for the Insurance Information Institute, an industry trade group. It was common knowledge on the Gulf Coast that flood is not covered, has not been covered and never will be covered under a homeowners' policy.

Many local residents and political leaders argue that Katrina's enormous storm surge does not fit the usual layman's definition of a flood.

They are using the fine print in people's policies to take financial advantage of them, U.S. Rep. Gene Taylor, a Democrat from Bay St. Louis, said in an interview.

A 30-foot wall of water that is pushed in by a hurricane is, I think, the flimsiest of excuses that those people could ever find for not paying on those claims, said Taylor. It was not a flood. It was a hurricane caused by wind, and they ought to pay.

Hartwig argues that the language is clear and unambiguous. The standard homeowners policy approved by regulators in every state excludes any loss caused by, resulting from, contributed to or aggravated by flood, surface water, waves, tidal water or overflow of any body of water, or spray from any of these, whether or not driven by wind," according to sample language provided by the trade group.

Nevertheless state Attorney General Jim Hood has filed suit against State Farm, Allstate, Mississippi Farm Bureau and other carriers, trying to force them to pay up for damage from Katrina. He argues that homeowners bought their insurance for the primary purpose of insuring against any damage that could possibly result from hurricanes originating in the Gulf of Mexico.MSNBC

Those issues were first brought up in Florida. There are different issues for those whose homes were destroyed or severely damaged and had both the usual homeowners insurance and flood insurance. How do you determine what came first, the wind or the surge? There is ample evidence from available videos that the Mississippi Coast was battered by Katrina's winds long before the surge came in. It's an aggravation that people who have lost everything should not have to put up with. You pay homeowners insurance for decades without having to make a claim and then have to fight every step of the way to have the insurance companies ante up what is due.

A lot of people who had no storm surge related damages are facing an uphill battle to get the insurance companies to pay for damages caused by wind. The insurance companies which have shown record profits in past years are being very reluctant to pay what is due.

A case in point is my sister. All of her damage was caused by wind damaging her roof and causing water from the rain to damage one of her rooms. She has maintained ample coverage along with full replacement of the house and it's contents. When first surveying the damage to her home I told her she wouldn't have a thing to worry about. I said after Hurricane Elena hit, our insurance agent was out to see the damage caused by part of our roof being blown off and he wrote my ex and I a check on the spot for the damages. The insurance company is the same one she is using.

The insurance adjustor came out to her home, did a survey of the damage and my sister provided him with a CD full of pictures of the damage. Several weeks went by. She called the insurance adjustor. Somehow all of her paperwork had been lost. Another adjustor came out. A couple of weeks later, she received a check and an explanation of the settlement. The check was no where near enough to cover the damage to her home and it's contents. In reading the settlement papers, the insurance company had allowed the extravagant amount of $1.00 an hour for her to hire a carpenter!! Good luck on trying to find one that will work for that sum!

She protested the settlement and received a better one. But it still is not enough to cover all the damages. She is still fighting the insurance company. She has applied for an SBA loan and will receive one to cover the remaining costs of damages. She has had to deal with the loss of her job, the damage done to her home, cleaning up the mold and mildew from the water damage, starting a new job, and trying to keep our Mom calm. I try to help out as much as I can. She is reaching a breaking point.

You pay your insurance premiums with good faith that in the end they will promise to be like a good neighbor. Good neighbors don't try to add to your woes. They try to help you through the storms. Her insurance company has not and is still not being the good neighbor they claim to be. Her story is not unique. It is the same for a lot of homeowners.