Posted on 09/20/2005 1:09:29 AM PDT by WKB
Mississippi Governor Haley Barbour has commented to The Associated Press in Jackson that he would prefer to negotiate with insurance companies to encourage them to help homeowners without flood insurance rebuild their property, rather than resort to a lawsuit that could encourage carriers to leave his state.
The governor made a statement in response to a suit, filed last week by Attorney General Jim Hood, which sued major insurers on behalf of Mississippi residents whose homes were destroyed by water instead of wind. Hood said a standard homeowner's policy should cover hurricane damage, whether the loss came from wind or wind-driven water, such as storm surge.
Insurance companies contend homeowners should have bought additional flood protection. The governor said forcing the companies to pay for flood damage could bankrupt hem and drive them elsewhere.
"It's crucial that people who enter into contracts keep their contracts," Barbour told The Associated Press. "And that's what an insurance policy is�it's a contract."
The governor said insurance companies "must be held to these contracts." But he also said many people, particularly those who did not live in a flood plain, did not have flood coverage.
For those people, we are working very hard so that if they don't have insurance, or if they don't have coverage, that we can come up with a way to help them financially, help to make them whole," Barbour said.
Insurance Commissioner George Dale, sided with the governor. He asked the Mississippi congressional delegation to seek a bailout for those lacking insurance coverage.
"The insurance industry can take care of so many. The flood insurance program can take care of so many," Dale said. "But there are still others out there that do not fit under either of those. We cannot let them just absolutely be made bankrupt. It would kill our economy."
Ms Ping
The conservative, vs. the liberal sue happy response.
Yep and the wheel goes round.
Well, Jim Hood is a democrat but I don't know how liberal (extreme) he is.
This is going to prove interesting.
In one corner is the political... thousands of homeowners and voters who did not have proper insurance, many of whome will be bankrupt from the uncovered loss.
In the other, the factual... a contract is a contract. Insurors took on the risk based on the non-exposure to water damage claims. They simply cannot change an assumption and practice simply because the stakes are high. And if they did, they would open up themselves to all sorts of claims in other parts of the country. Water damage is typically excluded unless the result of a covered loss - a tree crashes into your roof and rain gets in: covered. Your roof leaks: not.
Looks to me like the taxpayers will have reimburse on a massive scale for the difference between whatever the insurance companies pay on the structures and the market value, and what do you do about contents coverage?
This whole insurance business makes me extremely nervous. Why would anybody in flood prone areas buy flood insurance going forward since the Federal Government will now be insurer of last resort, with no premiums. An insurance policy is a contract and is priced based upon specific sets of circumstances.
My sense is that we can help to make people whole, but unfortunately not for free. I certainly believe that some upper limit needs to be set - say the price of the least expensive accomodation - rather than replacement value. Perhaps this is what the negotiations will be focused on. Still I am sure that this will be the end of a number of local insurance carriers.
I think that I've got to side with the insurance co's on this one, MS. has a long history of floods and yet the people keep rebuilding in the same area.
I feel sorry for their loss, but I think the saying " The definition of insanity is, doing the same thing over and over again and expecting a different result", may apply here.
The majority of these people may not live in an actual flood plain, and therefore cannot purchase flood insurance.
You're right, in those cases its just an uninsured peril. Just a guess, but I would bet the insurance industry would prevail in court. You can't throw out contract law because a terrible calamity happens.
Well, I think the people that were caught unaware, were those that were not in a flood area.
I'm not in a flood area, in our state you need flood insurance to get a mortgage if you are in a flood area, but we've never had it because we're relatively high.
However, we live on a peninsula, and a thirty foot tidal surge would probably flood my home (the water wouldn't stay, probably drain off within 6 hours.)
The more interesting part to me will be "replacement cost" versus actual insurance coverage. After Florida's 4 hurricanes last year, we upped our coverage significantly, and also added a "replacement coverage" clause. Our insurance payment went up almost 50 percent, but part of that was due to our upping the coverage.
If these folks have held property for awhile and not adjusted their insurance, their coverage is going to be far lacking from what it will cost to rebuild, especially at today's cost of building materials. If MS stiffens their building code (maybe they use Miami/Dade code already, I have no idea), it definitely adds even more to the cost of rebuilding.
But his government filed suit to make the insurance companies pay regardless of what the contracts say. The press will spin this against the "evil" insurance companies. Maybe they can compromise, maybe pay what the premiums would have been over a period of 20 years or something.
A child can predict a storm will eventually ravage a Gulf Coast home.
Building or buying a home on the coast is a choice. That choice carries a very high risk the rest of us should not be asked to finance.
Many of these same areas have been slammed by hurricanes, over and over again.
That's what the FBI would call a clue.
I have been a multiple lines insurance agent for 36 years. If the insurance industry pays for claims for which they are not legally liable, that will leave the companies without the financial means to pay for claims in other areas of the country for people who paid for coverage. That simply would not be morally right.
I worked as an administrator for a insurance company called American Spirit about 13 years ago, they left Texas because of tornadoes here, they got upset after paying out on a few claims. A lot of us Lost our jobs when they bolted. They had the lowest premiums of any carrier in Texas.
When Hurricane Hazel went through the only thing left was a slab of concrete, and a piece of pumbing pipe sticking 20 feet in the air with a bathtub attached to it.
Insurance companies denied the claim because of flood waters.
Two weeks after the storm, a farmer in Conway, SC about 20 miles inland, found a shirt that he had sewn his name, address and phone number in and called him. They made the insurance company pay, with the shirt as evidence that it was wind and not water that had destroyed the house.
We had the same problem here in Southern Maryland when Isabel struck. The Insurance people screwed around with everyone. They like to receive premiums, but they sure hate to pay out. The storm surge got a lot of people homes.
There is a difference between a flood and a wind driven storm surge. Tides arent floods.
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