Mark's Notebook

Judge Rules for Insurers in Katrina

New York Times

by Joseph B. Treaster

A federal judge in Mississippi sided with home insurance companies yesterday and ruled that they did not have to pay for the flooding that destroyed tens of thousands of homes in Hurricane Katrina.

Insurers have already paid $17.6 billion for damage to homes from Katrina that was attributed to wind only. But this was a victory for the companies, because they could have been forced to pay out untold billions more if they had been required to cover damage from flooding caused by the storm. Several hundred thousand homes were damaged or destroyed by Katrina.

The insurers had claimed their policies ruled out coverage for flooding. Lawyers representing homeowners argued that in selling home insurance with many references to windstorms and hurricanes, the insurance companies led customers to believe that any hurricane damage — from wind or water — would be covered.

The ruling therefore upholds a longstanding practice of insurers of not covering flood damage, which is typically insured through the federal government.

http://www.nytimes.com/2006/08/16/business/16insure.html

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Last updated Tuesday 13 May 2008