Tuesday, March 28, 2006

Question of Hurricane Wind Damage vs. Water Damage Is One for the Jury; Scruggs Alleges Insurance Company "Coerced and Altered Engineering Reports"

In a federal district court in Mississippi, Judge L.T. Senter, Jr. rebuffed Allstate Insurance Company's request to dismiss a case brought against two of their policyholders. Allstate had refused to provide coverage for damage to the home of Elmer and Alexa Buente of Gulfport, Mississippi, despite a question as to whether the damage was caused by wind, and particularly, the hurricane's wind-driven storm surge.

As reported by the AP:

Richard "Dickie" Scruggs called the ruling "a huge victory" for all Allstate policyholders whose post-Katrina claims were denied. "This was their kill shot," Scruggs said of Allstate's motion to dismiss the case. "They asked for the case to be thrown out. Instead, it was rejected right back in the faces."

. . .

. . . Scruggs said he's gathering evidence that companies are pressuring engineers to alter their conclusions on storm damage so claims can be denied.

Scruggs said a whistleblower -- a "highly placed insider" at a major insurance company -- has given him copies of "coerced and altered engineering reports" that companies tried to keep "under lock and key."

Mississippi Attorney General Jim Hood also is suing insurance companies for denying Katrina claims. Hood has said he also is investigating insurance companies for their "fraudulent" handling of claims.


Update: Biloxi's Sun Herald has more:
State Insurance Commissioner George Dale sent the company [State Farm] a stern letter Monday demanding an explanation [for its frequent use of concurrent causation clauses to deny coverage].

. . .

He wrote to State Farm: "More specifically, we are hearing from your insureds who have slab claims as a result of Hurricane Katrina who complain that State Farm is supposedly taking the position that even if a dwelling suffered wind damage prior to the arrival of storm surge, no claim payment for wind damage is due since the water would have washed the structure away anyway, notwithstanding the damage caused by wind.

"If this is State Farm's position, it is contradictory to representations made by State Farm to Department representatives."

. . .

Although each company's policy language differs somewhat, [Gulfport attorney Ben] Galloway thinks the ruling [of U.S. District Court Judge Judge Senter] will apply to other insurance companies, too. It was all the talk Monday in legal circles.

"(Senter) found that these clauses are ambiguous and that they don't meet the expectations of the insureds that they will have coverage," Galloway said.

. . .

. . . "They are telling everyone that they do not have to pay, whether the wind tore our house(s) up and blew them away because, ultimately, the water came in. We had Hurricane Coverage.

"Would someone please tell me what in the world Hurricane Coverage covers?"

Second update (4/14/06):

The Sun Herald has further coverage of a new Judge Senter decision. Although policyholders will continue to disagree and press the argument in other courts, it is Senter's opinion that certain terms of Allstate policies are "clear and unambiguous" in excluding damage from "tidal waters." A fact-specific inquiry concerning wind vs. water remains for trial.

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