Posted on 03/31/2006 4:10:32 AM PST by WKB
There is a rising tide of court battles over Hurricane Katrina damage. Homeowners versus their insurance providers. Wind versus water. Now some "whistle-blowers" claim to have proof insurance companies altered damage reports to deny coverage.
August 29th...a storm with record tidal surge. Katrina blasted the scenic Mississippi Gulf Coast. 7 months later..blue roofs..white boxes... and a raging debate.Was it Katrina's violent winds or tsunami-like storm surge that decimated the coast? The language of hurricane insurance policies is being challanged in the courts. " This is a battle I don't want to fight." Richard Scruggs is a high-powered, enormously successful plaintiff's lawyer . He tells us, "The companies should have done the right thing." Scruggs is taking on insurance giants who refuse to pay up on claims. "It involves billions of dollars." Scruggs, who took on big tobacco companies also claims to have whistleblowers in this case. "The insiders are very highly placed..people within the company." Insurance insiders reportedly squealing on questionable policies. We asked Scruggs if he had proof. " Specifically have you seen altered documents?" His reply, "Yes."
We obtained copies of those conflicting engineering reports. That damage report was about a home destroyed 13 miles inland. A Kiln couple is suing State Farm . Terri Mullins says she and her husband are very upset. The first report in October concluded the cause of damage was due to hurricane force winds. But a second report emerges this January. The conclusion: minimal obvious wind damage consistent with rising water. William Mullins told us, " They flat out told us , you weren't supposed to get that first report and they acted almost appalled we had a copy and asked how we got it." State Farm used the second report and storm surge as the basis for not paying the Mullins claim. According to The Katrina Groups attorneys and Mr. Scruggs, "First report says wind, company doesn't like it, shred it deep six it..don't pay it..get a second report..by the same engineering from that says what the want it to say. The Director of the Insurance Information Institute, Bob Bailey told the Insurance Journal Daily Scruggs should quote "put up or shut up." He says insurance companies in question should, "insist on a subpoena in which Scruggs will have to come forward and not only name his whistleblower but bring him in."
Another coast couple is also crying foul. Their first engineering report blamed wind damage. Later a second report was issued. Gulfport homeowner, Dr. Hubert Smith's attorney talked about the second document issued. "It said the house was racked and severely damaged by storm surge, totally different." Their lawyer claims Rimkus Consuling altered documents and forged the inspectors signature on the storm surge report. A Rimkus official told us he has not received a copy of the lawsuit and could not comment. Meanwhile, the Gulfport homeowner said he did get an offer from his insurance carrier. "They did send me, excuse me, $9,000 to put on a $30,000 roof." $9000 on a half million dollar policy.
Insurance companies deny any form of deception. Investigators for the Attorney General are particularly interested seeking engineering reports as part of a criminal review. Attorney General Jim Hood said there is a specific statute addressing the matter. "The operative term is fraudulent denial of claims. And if the law is broken , Hood issued this warning. "Anybody involved, engineers adjusters will go to the pen. It's not going to be probation if I can send them to the pen."
Some call it a David and Goliath showdown, with the fabric of the gulf coast and billions of dollars at stake. State Farm and other insurers vehemently deny that they are liable for the damages caused by water. State Insurance Commissioner George Dale agrees. U.S. Senator Trent Lott, who lost his waterfront home says a congressional investigation is warranted.
And he's Trent's brother-in-law!
YES! "AND" the last I read, Trent was unhappy with his insurance coverage after his family home was destroyed.
With the amount of disgust in Lousiana and Mississippi...and State Farm appears to be the worst of the companies...although alot of them are "cheating" the system...it will not surprise me if these states forbid any business with State Farm. And regional states close by...may view this...particuliary Florida and Alabama....and start pushing them to the front door as well. For a insurance company...to have 3 or 4 states denying you a chance to sell your products....you really start to scare investment folks up alot.
Based on the atittude of alot of these insurance guys....perhaps we should simply toss a couple into a New Orelans city jail for a week and see how friendly and cooperative they are then.
I think you have that backwards, don't you?
Along the MS Gulf Coast, most of those houses are not considered in a flood zone, and the homeowners were told they didn't need it. There was one insurance agent, in my b-i-l's parish who, when he wrote homeowner's policies, convinced his clients to purchase the flood insurance, since it wasn't that much more expensive. His folks have already gotten their payouts. The company didn't even blink, just wrote the checks. Needless to say, that man is a hero in his customers' eyes.
Her friend ended up with a sailboat in their yard, and their boat ended up 6 MILES away at the bottom of a pile of other boats in the center of a town. They had already finished the deal with the insurance company when they got the call that their boat had been found. She just told the guy calling to call the insurance company since they owned the boat now.
Excessive rain can cause flooding. Mix that in with hurricane winds and you have storm surge.
My dad has flood insurance, not because he was forced into buying it, but because the policies are so broad, that some cover more than just floods. His crop insurance policy also extends to other such acts of God like hail damage.
The problem with these lawsuits that Scruggs and Hood are filing is that they are overreaching. They essentially want to void valid contracts and get coverage for damage that premiums were never paid to cover. If this happens, I fear that no insurance company will want to write policies in Mississippi and I can't say that I would blame them.
Do you have a link to that ABA guide you referenced in your post? Please provide it.
The only people who are going to make money out of this are Scruggs and his cronies. I don't know why people want to pick on adjusters.
You've explained it to me perfectly and I hope everyone reads your post.
If that happens no company in the United States will want to write ANY kind of contract in Mississipi, up to and including mortgages. Not if they can be changed on a whim.
Because they are the people they see.
Insurance companies refuse to pay on legitimate claims. Lawyers get hired. Lawyers take 30%.
Floyd closed I-95 at the VA/NC border, and flooded eastern NC. Greenville lost thousands of homes. I flew from Morehead City to Raleigh, to Wilmingtin, and back, and saw reflected water over 75% of the area. It went north and inundated NJ as well...
Of course the insurance companies most certainly are making the money ... it is called premiums!Insurance companies refuse to pay on legitimate claims. Lawyers get hired. Lawyers take 30%.
Insurance companies are in the business of collecting premiums ... and denying claims.If the insurance companies paid on legitimate claims ... the policy holders would be made whole ... and the lawyers would not make a dime.
When the insurance companies refuse to pay on legitimate claims ... any policy holder is wise and prudent to hire a lawyer and "settle" for 70% of what their claim is worth and their policy paid for, after 30% goes to a legal fee ... instead of "settling" for the 0% the insurance company intends for them to get. Most lawyers cannot work pro bono [for nothing]. Litigation is expensive. Most claimants lack the skills necessary to represent themselves effectively. Most lawyers cannot work pro bono [for the good of a client, without any remuneration].
If the insurance industry did not want lawyers to make fees ... well, they could just pay all their legitimate claims. Don't hold your breath.
I tried on numerous occasions to buy flood insurance from a variety of major underwriters. On every occasion I was told they didn't sell it, that the only way to get flood insurance was through the government program. And everytime I'd try to buy that insurance, I was told I was ineligible because I didn't live in a flood plain. Bottom line: I COULDN'T buy flood insurance.
MM
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