Wind coverage counts

Supreme Court Says Even with (Katrina) surge, policies stand

The Sun Herald (Biloxi, MS)
October 8, 2009

A landmark ruling Thursday from the Mississippi Supreme Court establishes that homeowner insurance policies cover wind damage from hurricanes when water contributes to the loss.

“This opinion by a unanimous Mississippi Supreme Court in Corban vs. USAA clears up a question of untold importance to homeowners in Mississippi and in every corner of this nation,” said policyholders’ attorney Richard “Flip” Phillips, who pointed out that more than 50 percent of Americans live near a coastline. “An insurance company can always come up with some contorted interpretation to deny coverage if it just does not want to pay.

“Homeowners can depend on their contracts of insurance only if the courts are willing to enforce those contracts.”

Attorney Judy Guice, who fought for insurance coverage after the loss of her Ocean Springs home to Katrina, won a victory for policyholders Thursday in the wind vs. water debate. The Mississippi Supreme Court on Thursday sided with Guice.

Phillips said the ruling is “bittersweet” because it came too late for many homeowners who settled lawsuits against their insurance companies based on an erroneous ruling from the 5th U.S. Circuit Court of Appeals.

The federal appellate court held that “anti-concurrent causation” clauses in insurance policies mean wind damage is not covered when water contributes to the loss. The appellate court ruling reversed decisions by U.S. District Judge L.T. Senter Jr. that were in line with the Supreme Court decision Thursday.

The state Supreme Court opinion now prevails because insurance contracts are governed by state law.

Robert Hartwig, who heads the Insurance Information Institute, said the ruling could affect the cost and availability of homeowner policies on the Mississippi Coast.

“What this basically suggests is that the cost of claims is going to be higher than insurers anticipated,” Hartwig said, “so there are direct consequences for the price of insurance in Mississippi. and potentially for the availability as well.

“If the state of Mississippi is going to take a different tack from the federal courts, the policies will have to be priced and underwritten appropriately. It makes selling policies in Mississippi risky and, on average, more expensive. There’s just no other way around that.”

A USAA spokesman said after consulting with a company attorney that USAA is “pleased” with the state Supreme Court ruling. The company believes its policies cover wind damage when homes also are subjected to tidal surge, spokesman Paul Berry said.

“The court confirmed USAA’s approach to handling Katrina claims in Mississippi is correct,” Berry said. “Although other insurers may have taken different approaches, USAA has always paid for damage solely caused by wind. We are also pleased the court confirmed USAA’s position and decades of insurance law that damage caused by storm surge is not covered.”

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