The AP is distributing t his update on the legal action against homeowners insurers in the wake of Katrina:
Leonard sued. His lawsuit, set to go to trial Monday, was expected to be the first legal test for insurers who claim their policies don’t cover floods. They contend that Katrina’s storm surge was water pushed by the force of the wind.
Leonard sued. His lawsuit, set to go to trial Monday, was expected to be the first legal test for insurers who claim their policies don’t cover floods. They contend that Katrina’s storm surge was water pushed by the force of the wind.
Leonard, a police lieutenant, and his wife, Julie, claim Nationwide Mutual Insurance Co. denied their claim without thoroughly investigating the damage to their house, which is several hundred yards from the Mississippi Sound.
The Leonards, who purchased their policy more than a decade ago, also claim that their insurance agent had assured them that they didn’t need to buy flood insurance for their home because their policy would cover all hurricane damage.[.]
Scruggs represents around 3,000 policyholders on Mississippi’s Gulf Coast, including his brother-in-law, U.S. Sen. Trent Lott (news, bio, voting record), R-Miss., whose Pascagoula home was demolished by Katrina on Aug. 29.
Scruggs also has filed against other insurers, including Allstate Insurance Co., Metropolitan Life Insurance Co., State Farm Insurance Cos. and United Services Automobile Association.
This should be an interesting case to watch. The coverage question should be clear - homeowners policies don’t cover flood, and damage directly from storm surge is considered flood. The other questions - how much of the damage was from flood, and was there misrepresentation on the part of the agent as to what coverage was needed - could be dicier, as could questions about whether insurers have been handling claims in good faith.
Throw in the venue, and the potential bias of judges and jury…