Mississippi to sue insurers over flood damage

[BigToque]

Link

NEW YORK (Reuters) - Mississippi Attorney General Jim Hood plans to sue insurance companies to force them to pay for flood damage to homes in the wake of Hurricane Katrina, a source familiar with the matter said Wednesday.

The Democrat attorney general believes that Katrina's horrific winds caused the flooding, said the source, who declined to be named.

Homeowners insurance typically does not cover damage from floods but does pay for damage caused by wind, according to Jim Auden, a Chicago-based analyst with Fitch Ratings.

"(Hood) is calling illegal the provisions that prevent homeowners from getting a claim on their property that was destroyed in the hurricane," the source said.

The attorney general was expected to announce the lawsuit as soon as Thursday morning.

Hood's office is also investigating reports that claims adjusters are offering homeowners an extra $3,000 in living expenses if they sign waivers for flood damage, the source said.

The three insurers with the biggest market share in Mississippi, where even homes outside the flood plain were inundated, are: State Farm Mutual Group, at over 30 percent; Mississippi Farm Bureau Mutual Insurance Co., with nearly 20 percent; and Allstate Corp. (Research), at almost 10 percent, according to the Insurance Information Institute, a trade group.

Allstate spokesman Michael Trevino said: "Flood insurance is the province of the federal government. Allstate homeowners policies all contain an exclusion indicating that flood is not covered by the Allstate policy, regardless of the cause of that flood."

A State Farm representative declined to comment.

The National Flood Insurance Program, run by the Federal Emergency Management Agency, only offers homeowners up to $250,000 to rebuild damaged properties. And the maximum for replacing property is $100,000.

Companies that estimated the amount of damage done to insured property -- homes and commercial buildings -- by catastrophes such as Katrina have raised their initial estimates, Fitch's Auden said.

For example, Risk Management Solutions now sees an insured loss ranging from $40 billion to $60 billion. The company at first predicted $35 billion of losses, Auden said.

Such estimates easily top the $21.5 billion of losses inflicted by Hurricane Andrew in 1992.

 

[sixone]

Everybody get ready: premiums are goin' up, up, up!!

 

[ElFenix]

i wonder why private insureres never have flood coverage?

 

[PingSpike]

Its the federal governments problem, thats allstate's stand. Are you in good hands?

 

[Anubis]

Originally posted by: ElFenix
i wonder why private insureres never have flood coverage?

because most of world does not live in a flood plain, almost all comanys offer it as an add on to it tho

 

[sixone]

Originally posted by: ElFenix
i wonder why private insureres never have flood coverage?

Because the federal government does. Why would a private insurer take the additional risk?

 

[Jzero]

Originally posted by: ElFenix
i wonder why private insureres never have flood coverage?

I guess they figure if you need it, you'll get it from FEMA and it's one less thing they have to pay out on.

The problem is that FEMA won't write you a flood policy if you don't live on a flood plain, and I bet a lot of these people didn't.

 

[Amused]

Amazing that a state is going to sue a private company for individuals who had no flood coverage with the private company.

Folks, if this isn't thrown right out of court, our freedom is most certainly doomed.

 

[Aves]

Total BS.

 

[BurnItDwn]

I hate insurance companies.
But this is stupid. No Flood coverage = NO FLOOD COVERAGE
If you want flood coverage, pay extra and get flood coverage. It's your choice.

 

[BlueWeasel]

It sucks for the homeowners, but as someone who has investigated claims for insurance companies, people really need to review and read their policy. I don't see how this proceeding would go anywhere.

 

[halik]

ummm if your house is flooded and you didn't buy flood insurace.... why is the insurance company supposed to pay?

I'm gonna sue AAA of michigan next time i get into a car accident. I don't have collision (only comprehensive), but the driver that hit me "vandalized" my car :roll:

 

[Scarpozzi]

This is ridiculous...you can't expect the insurance companies to cover this if the ppl didn't have flood insurance.

Ohh....it's the wind the caused the water to come in....bah! They need to realize that wind damage and water damage are 2 categories...this totally won't hold up in court and I hate that the piece of crap trying to get this to pass is wasting the money of the insurance companies that need to be paying their customers.

 

[jadinolf]

Originally posted by: Amused
Amazing that a state is going to sue a private company for individuals who had no flood coverage with the private company.

Folks, if this isn't thrown right out of court, our freedom is most certainly doomed.

For sure.

 

[Jzero]

Originally posted by: BurnItDwn
I hate insurance companies.
But this is stupid. No Flood coverage = NO FLOOD COVERAGE
If you want flood coverage, pay extra and get flood coverage. It's your choice.

Not everyone has the choice - not everyone is eligible for FEMA flood insurance and most underwriters will not cover floods even if you ask them - they'll just serve as the go-between on getting you a policy from FEMA, which won't help you if you aren't eligible.

Of course this doesn't change the bottom line that the state shouldn't demand that private insurers cover losses that they have NEVER covered, but it's not as simple as "you should have got flood insurance."

 

[Armitage]

FYI: http://www.fema.gov/nfip/whonfip.shtm

In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. The Mitigation Division a component of the Federal Emergency Management Agency (FEMA) manages the NFIP, and oversees the floodplain management and mapping components of the Program.

Nearly 20,000 communities across the United States and its territories participate in the NFIP by adopting and enforcing floodplain management ordinances to reduce future flood damage. In exchange, the NFIP makes Federally backed flood insurance available to homeowners, renters, and business owners in these communities.

Flood damage is reduced by nearly $1 billion a year through partnerships with communities, the insurance industry, and the lending industry. Further, buildings constructed in compliance with NFIP building standards suffer approximately 80 percent less damage annually than those not built in compliance. And, every $3 paid in flood insurance claims saves $1 in disaster assistance payments.

The NFIP is self-supporting for the average historical loss year, which means that operating expenses and flood insurance claims are not paid for by the taxpayer, but through premiums collected for flood insurance policies. The Program has borrowing authority from the U.S. Treasury for times when losses are heavy, however, these loans are paid back with interest.

Flood Insurance is required by law

To get secured financing to buy, build, or improve structures in Special Flood Hazard Areas (SFHA's) you will be required to purchase flood insurance. Lending institutions that are federally regulated or federally insured must determine if the structure is located in a SFHA and must provide written notice requiring flood insurance.

Flood insurance is available to any property owner located in a community participating in the NFIP. All areas are susceptible to flooding, although to varying degrees, in fact, 25% of all flood claims occur in the low-to-moderate risk areas. Flooding can be caused by heavy rains, melting snow, by inadequate drainage systems, failed protective devices such as levees and dams, as well as by tropical storms and hurricanes.

There's a big difference between having to buy flood insurance because the law says you must and choosing to buy flood coverage because it's in your best interests to do so. We recommend that all property owners purchase and keep flood insurance because it is the best means of recovery from flood damaged.

Keep the peace of mind in knowing that your property will be protected from damages from the next storm and you're not left to cover the losses yourself?

As I understand it, no private insurance companies offer flood coverage - you have to buy it through NFIP.

The last bolded bit is interesting ... if your community doesn't participate are you out of luck wrt flood insurance?

 

[Jzero]

Originally posted by: Armitage

Flood insurance is available to any property owner located in a community participating in the NFIP.

As I understand it, no private insurance companies offer flood coverage - you have to buy it through NFIP.

The last bolded bit is interesting ... if your community doesn't participate are you out of luck wrt flood insurance?

That is my understanding. I asked about flood insurance, as I lived along a major river, and while I felt the chances of it flooding were very slim (I was a few hundred yards from the river and probably 30+ feet above it) I figured I'd investigate the costs and learned that flood insurance was not available in my area even if I wanted it.

 

[SagaLore]

Why do we even bother. We are we forced.

Let's get rid of all insurance companies. With the amount of money the government wastes worrying about the insurance companies, we might as well just setup federal and state insurance departments. I'm starting to believe the government could actually do a better job with it then the private companies!

 

[spacelord]

like it said, winds caused a flood. A flood is a flood.

If my rates go up, in Michigan, because of all the damage in other states.. its time for me to switch companies. I heard there are local companies that will, for example, only insure Michigan homes. Therefore its not affected by all the folks that live in Hurricane, Mudslide, and ForestFire areas of the country.

 

[Armitage]

Here's an NFIP page to "estimate your flood risk": http://www.floodsmart.gov/floodsmart/pages/riskassesment/findpropertyform.jsp

I keep getting a network error when I try to submit though. I'm guessing it should tell you if you are in an NFIP covered area.

Not that I'm worried - it would have to be a flood of literally biblical proportions to get to my home 😛

 

[ElFenix]

Originally posted by: sixone

Originally posted by: ElFenix
i wonder why private insureres never have flood coverage?

Because the federal government does. Why would a private insurer take the additional risk?

the feds had to step in when private insurers weren't, i thought.

 

[davew0670]

wont surpise me one bit to see a few insurance adjusters or ins. company owners shot by some disgruntled homeowner when they hear their property isnt covered.

 

[Amused]

Originally posted by: ElFenix

Originally posted by: sixone

Originally posted by: ElFenix
i wonder why private insureres never have flood coverage?

Because the federal government does. Why would a private insurer take the additional risk?

the feds had to step in when private insurers weren't, i thought.

Well, private insurers were getting hosed because people would build in flood plains, get flooded out with regularity, and make claims. Would YOU insure them?

I mean, that's like selling auto insurance to a demolition derby driver's derby car.

 

[PingSpike]

Originally posted by: davew0670
wont surpise me one bit to see a few insurance adjusters or ins. company owners shot by some disgruntled homeowner when they hear their property isnt covered.

Well, this is mississippi we're talking about here.

 

[Armitage]

Originally posted by: ElFenix

Originally posted by: sixone

Originally posted by: ElFenix
i wonder why private insureres never have flood coverage?

Because the federal government does. Why would a private insurer take the additional risk?

the feds had to step in when private insurers weren't, i thought.

The program was set up as a government quid pro quo - they offer insurance, but require participating communities to enforce various zoning & building requirements to mitigate the flood risk. Something that private insurance companies would be unlikely to be able to accomplish. They would simply set the rates accordingly, which would be so high that most people would be uninsured and the government would end up picking up the tab to rebuild these communities.