Gulfport, Miss. August 16, 2006--In a ruling likely to affect spending for post-Katrina floor repair and replacement, a Mississippi federal judge has ruled that the home insurance policy of one couple did not cover flood damage.
The ruling almost certainly will be taken as precedent by other insurers for Katrina claims, according to several news reports.
Although insurers have paid $17.6 billion for wind damage to homes hit by Katrina, the ruling is clearly a victory for the companies. An estimated 100,000 homes were damaged or destroyed by Katrina.
The ruling did allow payment for wind-related damage, including damage caused by wind-driven water, and that may allow some latitude in storm-damage claims.
“We’re gratified that the major provisions of the standard homeowners insurance policy were upheld,” Robert P. Hartwig, chief economist for the Insurance Information Institute, a trade group in New York, told the NY Times.
The ruling upholds a practice of insurers of not covering flood damage, which is typically insured through the federal government.
The ruling, by Judge L. T. Senter Jr. of Federal District Court in Gulfport, applied to case involving Nationwide Mutual Insurance, but he is also scheduled to preside over many similar cases pending in federal court in Gulfport. Hundreds of other cases are reportedly pending in state courts.
In his ruling yesterday, Judge Senter said that the wind damage was covered “even if the wind damage occurred concurrently or in sequence with the excluded water damage.”
Nationwide in this case paid the homeowners $1,661.17 for wind damage, and the judge said they would be entitled to another $1,228.16.
