Mississippi Attorney General Jim Hood has filed suit against five insurance companies. These companies are accused of cheating hurricane survivors out of millions of dollars. The Attorney General is trying to force them to pay for flood damage to homes in the wake of Hurricane Katrina. He believes that Katrina’s horrific winds and storm surge actually caused the bulk of the damage. The insurers named as defendants are Nationwide Mutual Insurance Co., State Farm Fire and Casualty Co., Allstate Property and Casualty Co., and United Services Automobile Association. Homeowners insurance typically doesn’t cover damage from floods but does pay for damage caused by wind. Anybody who watched the television coverage of the hurricane knows that winds and storm surge caused tremendous damage to buildings. Many of the structures were destroyed long before any flooding occurred.
According to the Attorney General’s office, insurance adjusters were getting victims to sign forms acknowledging that their policies didn’t include flood damage. This was apparently being done in a manner that “smacks of fraud.” I hope that wasn’t across the board by all companies and those will turn out to be isolated incidents. I understand victims were told that the forms were purportedly for advance money on policies. If this proves to be a widespread fraud,somebody needs to go to jail.
The National Flood Insurance Program, run by the Federal Emergency Management Agency, only offers homeowners up to $250,000 to rebuild damaged properties. The maximum for replacing property is $100,000. The amount of damage done to insured property – homes and commercial buildings – will be very high. While New Orleans received the most news coverage, Mississippi was also hit very hard by Katrina. The destruction along the Gulf Coast was devastating. Alabama suffered damage, but nothing in comparison to Mississippi and Louisiana. Incidentally, many have forgotten that Katrina first hit south Florida and caused considerable damage there.
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