Insurers Sued Over Hurricane Katrina Coverage

Mississippi on Thursday sued insurers to force them to pay billions of dollars in flood damage from Hurricane Katrina, saying standard insurance polices have led homeowners to believe they are covered for all hurricane damage, whether from high winds or storm surges.




To deny coverage to those whose homes were wiped out by the storm surge, but lacked flood insurance, is "taking advantage of people in the most dire straits," said Attorney General Jim Hood, who filed the lawsuit against five major insurers.

"We intend to ... make sure the insurance companies pay all that they owe these people on the coast," he said. Hood said storm surge damage has been estimated at $2 billion to $4 billion. He asked a Chancery Court to void provisions in the policies that attempt to exclude from coverage losses or damages directly or indirectly caused by water, whether wind-driven or not. He said he would seek a restraining order next week pending a full hearing.

Only about 30 percent of the houses in disaster-struck portions of Mississippi and Alabama had flood insurance, according to Federal Emergency Management Agency estimates. Allstate Property and Casualty Insurance, one of the companies named in the lawsuit, said in a statement that it was unfortunate the litigation had begun so early in the recovery process.

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