Complain about a product or service

Katrina Victims Face Insurance Delays, Denials

Mississippi Files Sues to Void Certain Exclusions

September 16, 2005
Katrina survivors are reporting difficulty in obtaining copies of their insurance policies in the wake of the disaster and some are finding that insurance companies are refusing to pay claims, pointing to exclusions against water damage.

Hurricane Katrina • The End of the World: Louisiana is Disappearing • Mississippi Sues State Farm Over Katrina Coverage • Katrina's Legacy: A Flood-Damaged Handicap Van • Payback: State Farm Writes Off Mississippi • Judge Nixes State Farm Katrina Settlement • Judge Rules Against State Farm in Katrina Case • Victimized Twice: Hurricane Victims Scammed by Unscrupulous Contractors • New Orleans Refloats Its Cruise Ship Business • One Year Later: To Miss New Orleans --- • Katrina Archives --- What's New? • Continuing coverage of Katrina recovery efforts

The Foundation for Taxpayer and Consumer Rights (FTCR) wants insurance companies to put copies of generic policies on the Web so consumers can get an idea of what is covered. And Mississippi Attorney General Jim Hood is suing insurers who are refusing to pay for certain types of damage.

Many Katrina survivors who do not yet have copies of their policy are being told by insurers that they will be denied most or all of their claim on the basis of a flood exclusion. Far too many of these survivors, FTCR fears, will take the insurer's assessment as an indisputable truth and turn to FEMA for taxpayer assistance that is dramatically less valuable than insurance coverage.

FTCR, which is tracking insurance complaints from homeowners and businesses, reports that many policyholders are being told they will have to wait two weeks before a new copy of policies lost during the storm is sent.

In response, the group is calling on insurance companies to place generic insurance policy forms -- along with specific hurricane coverage and flood exclusions -- on the Internet, so Katrina survivors who don't have a copy of their policy can immediately obtain important information about their insurance coverage.

While noting that each individual's policy may have different coverage levels and endorsements, the group said that insurers could easily place the standard policy forms detailing windstorm and hurricane coverage online and that this would begin to clarify for policyholders what may or may not be covered and help expedite the claim process.

"With the massive relief effort by charities and government underway and the postal system up and running, it's hard to believe that insurers cannot get copies of policies to customers immediately," said FTCR's Executive Director Douglas Heller.

"But if the insurers cannot get policies to survivors expeditiously, then the generic policy forms with the key language describing what is covered under the hurricane or windstorm endorsements should at least be put online. People know that they had some kind of hurricane coverage, but without a policy it is hard to figure out what's covered," Heller added.

Without a copy of the policy, or at least a generic policy form that provides an indication of what is and is not covered, policyholders will face delays in beginning the claim process and might be forced to turn to FEMA for assistance when, under their policy, insurance coverage is due, said FTCR.

The consumer group has been chastising insurers for these quick denials, arguing that residents in Louisiana, Mississippi and Alabama who purchased insurance with hurricane or wind coverage should be covered, whether wind or water that did the damage, because the obvious and initiating cause of all the damage was Hurricane Katrina.

The group recommends that people refuse to settle their claims until they have a copy of their policy and have reviewed it and their insurer's offer with an independent expert.

"Most disaster survivors expect that their insurer will treat them fairly and they instinctively trust their company. But too often insurers have failed their policyholders in the wake of a disaster and people are forced to fight for a fair settlement. The first step in ensuring a fair claims process is ensuring that survivors know what is covered," said Heller.

In Mississippi, Attorney General Hood said his office has filed a civil action against the insurance industry seeking to declare void and unenforceable certain provisions contained in property casualty insurance policies issued to Mississippi Gulf Coast residents excluding coverage from damage caused by Hurricane Katrina.

The Complaint asks the court to declare that certain insurance contract provisions are void and unenforceable as they are contrary to public policy, are unconscionable, and are ambiguous.

The provisions at issue attempt to exclude from coverage loss or damage caused directly or indirectly by water, whether or not driven by wind. The complaint states that these provisions should be strictly construed against the insurance companies who drafted the insurance policies and their exclusions.

The complaint also states that the issuance of such insurance policies violates the Mississippi Consumer Protection Act.

The complaint asks the court, among other things, to enter a Temporary Restraining Order to immediately stop insurance companies from asking property owners to sign documents stating that their loss was caused by flood or water as opposed to wind, and to stop using water exclusions to deny or reduce coverage for hurricane damage or loss.

The Court is also being asked to enter a preliminary and permanent injunction with regard to these same matters.

“I’m hopeful that next week we will be able to stop unscrupulous insurance adjusters from requiring people to sign away their rights to ‘flood damage’ claims in exchange for a significantly smaller amount which will be used for immediate living expenses. I want to encourage the people to continue to fight and I’ll do everything I can to make sure that insurance companies pay what they owe.” Hood said.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |