Kia Franklin

Katrina Insurance Claims Continue

Almost two years after the devastating storm, our country’s Katrina victims still await closure and healing. Many have found themselves embroiled in legal disputes in pursuit of the opportunity to rebuild their lives. The harrowing task of settling insurance policy claims on their damaged or destroyed homes is just one aspect of this struggle.

Today, the 5th Circuit plans to hear an appeal on a Mississippi-based Katrina insurance coverage claim (read more here). The trial judge told these policyholders, a couple who believes their home suffered $130,253 in damages from the storm, that their policy did not cover damage resulting from a combination of water and wind. This distinction has been the subject of a great number of Katrina-related insurance disputes.

Last week, the 5th Circuit ruled against Katrina-affected insurance policyholders and overturned a U.S. District Court ruling that insurance companies had to pay its policyholders’ Katrina-related claims. The previous ruling held that ambiguous policy provisions made it unclear which forms of storm damage were covered, while the most recent ruling states that the policy is unambiguous. (Wall Street Journal reports.)

From Yahoo Business:

Hurricane Katrina victims whose homes and businesses were destroyed when floodwaters breached levees in the 2005 storm cannot recover money from their insurance companies for the damages, a federal appeals court ruled Thursday. The case could affect tens of thousands of rebuilding residents and business owners in Louisiana, Daniel E. Becnel, who represented 21 plaintiffs in the case, said. Insurers could have taken a “multibillion dollar hit” if the ruling had gone against the industry, said David Rossmiller, an insurance attorney and analyst.

“This event was excluded from coverage under the plaintiffs’ insurance policies, and under Louisiana law, we are bound to enforce the unambiguous terms of their insurance contracts as written,” Judge Carolyn King wrote for a three-judge panel of the 5th U.S. Circuit Court of Appeals.

… The decision overturns a ruling by U.S. District Judge Stanwood Duval Jr., who in November sided with policyholders arguing that language excluding water damage from some of their insurance policies was ambiguous.

Duval said the policies did not distinguish between floods caused by an act of God — such as excessive rainfall — and floods caused by an act of man, which would include the levee breaches following Katrina’s landfall.

…This was a consolidated case, including about 40 named plaintiffs, including Xavier University, and more than a dozen insurance companies. It is just one of the cases pending in federal court over Katrina damage. The Army Corps of Engineers faces thousands of claims for damage resulting after the levees breached; King noted in her opinion that dozens more cases, some consolidated and involving property owners suing insurers, are pending in federal court in New Orleans.

…Insurance companies typically restrict property coverage to damage caused by wind, fire and other hazards. Congress launched the National Flood Insurance Program in 1968 to help homeowners living in flood-prone areas get flood insurance to complement private policies. Private agents sell the federal policies, which are often subsidized by taxpayers because premiums don’t factor in the real risks of damage.

More appeals to Katrina claims are scheduled for September. More on this to come soon.

Posted at 9:01 AM, Aug 06, 2007 in Permalink | Comments (2) | TrackBack (0)