| State to sue insurers over flood damage Source: Mississippi attorney general wants companies to cover damage to homes caused by flooding. |
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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. |
