Allstate won't pay Katrina flood claims

MarketWatch ^ | Sept. 20, 2005 | Alistair Barr

[george76]

Insurer's operating chief responds to Mississippi suit...

Allstate Corp. won't pay flooding claims stemming from Hurricane Katrina, Chief Operating Officer Tom Wilson said on Tuesday, in a direct challenge to a lawsuit filed last week by Mississippi Attorney General Jim Hood.

Controversy has emerged surrounding the devastating flooding that followed the storm. Standard homeowners' insurance policies typically exclude flooding, partly because a national, government-run program covers those risks. However, many homeowners hit by Katrina may not have bought this extra coverage.

Mississippi's Hood sued Allstate and four other leading insurers in the state on Sept. 16, arguing that their flood exclusions should be voided and that they should pay flood claims.

"Exhibit one for us will be just the national flood-insurance programs -- advertising programs, which they put on very aggressively every year," he said. "People know this is a separate coverage, so we're not having many issues with our customers."

Allstate's Wilson did concede that there will be "issues" when assessing what damage was caused by wind and what was the result of flooding.

[Adder]

I agree.

Only the feds would think its a good idea to step in and insure where private insurers refused to go, which is why there is a fed flood insurance program.

The MS ag might as well sue the feds claiming that people are covered whether they had flood insuance or not. It makes about as much sense.

Wait...he might just try that....

[Skooz]

If the people did not buy the coverage and pay the extra premiums, they don't have a leg to stand on.

To expect an insurance company to pay on non-existent policies is just goofy.

[Conspiracy Guy]

Their competitors don't cover it either.

[MizSterious]

Unlikely. Water damage is very different from wind damage. When we lived on the bay on the Gulf Coast, we knew the risks we took. We got the flood insurance, and were glad to have it even though we never had to use it. People who try to cheap out shouldn't expect to have their bills paid by those of us who paid.

[Ben Mugged]

"Allstates competitors should jump at this and say they will cover ALL claims flood or wind."

And if I was a stockholder in one of those companies I would ensure the CEO got canned.....

[quack]

Allstates competitors should jump at this and say they will cover ALL claims flood or wind. They would soon have all of Allstates customers.be bankrupt or raise insurance rates to their existing customers who live across the country.

[ladtx]

They may take a big hit now but seems to me that would be made up by the influx of new customers.

[TheDon]

Only the feds would think its a good idea to step in and insure where private insurers refused to go, which is why there is a fed flood insurance program.

In California, the gov't does earthquake insurance.

[Hegemony Cricket]

Hmmmmmmm. Why do insurance companies always own the tallest buildings in town?

[dfwgator]

I guess those folks with Allstate insurance weren't in 'good hands' after all.

Yeah but at least they don't employ homophobes. /sarcasm

[Rocky]

Everyone on the Gulf Coast is informed by their insurance company, neighbors, the press... that homeowner's insurance does NOT cover flooding (rising water). You must have flood insurance for that.

[quack]

I guess those folks with Allstate insurance weren't in 'good hands' after all.

They were in good hands.The homeowners simply didn't opt for flood insurance,which they had opportunities to do.No reason for Allstate to pay.That would like my insurance company covering the cost of my vehicle in a wreck,even though I only had liability insurance.

[b4its2late]

The good hands people?

[eyedigress]

So they won't flood..

[Cicero]

Allstate can't afford to buckle. It would be a terrible precedent, for the industry and also, in my opinion, for the rule of law in our country.

It is a basic constitutional principle, which relies on British common law tradition going back to Magna Carta, that it is TYRANNICAL to change the law ex post facto. If you have a contract or solemn agreement, you can't change it later just because it's convenient for you.

My insurance company specifically excludes flood coverage from my home policy in very large type, and I imagine Allstate does too. It offers to arrange flood coverage through another insurer, but only for an extra fee. You get what you pay for. You honor the contract you sign. Otherwise the rule of law goes up in smoke.

[Mulch]

Offer retroactive policies where coverage for Katrina could only be extended to homeowners that commit to purchasing the flood damage rider.

[Kenton]

That's the problem, when something like this happens, all the deadbeats who don't carry insurance come out of the woodwork and expect to be indemnified at the expense of the people who DO pay to properly insure their property.

I don't want my insurance costs going up to pay for people who aren't even insured by Allstate. And yes, I'm sorry about your loss.

[<1/1,000,000th%]

That's All-State's stand.

[dmz]

Is storm surge considered the same as a flood? whoever on this thread mentioned that the lawyers are gonna have a field day is spot on.

[Sthitch]

All State should not submit to the scam idea that the flooding damage was caused by the wind. I would be happy to have the Federal Government to get out of the flood insurance business, and leave it to the free market.