December 22, 2006
Your Insurer May Lose Billions Soon
Mark Landry could well be the face that inspired thousands. Hurricanes Rita and Wilma may be a distant memory now, but for those who suffered from its fury, the pain is still palpable. What has kept the memory of those painful days alive is the highhanded attitude of the insurers especially, insurer of last resort, Citizens. The end to this painful drama seems to be nearing finally. Landry recently won a case in the 15th Judicial District Court that, if upheld after appeals, may hold insurance companies accountable for billions of dollars in additional hurricane-related claims.
To begin at the beginning, Landry and his wife, Barbara, lost everything to Rita. Their home in Erath was a total loss, as wind and flood conspired to damage everything possible. But the loss of their home was probably not as painful as the denial of their claim by Louisiana Citizens Property Insurance Corp. The insurer denied the claim because floodwater was excluded from their policy. And the best part? Citizens failed to mention this fact in their policy application!
In his recent ruling, District Judge Edward Rubin said the insurer was liable to pay for damage to a house destroyed by Rita’s winds and floods even if the policy says floods aren’t covered. Why? Because that particular statement was left out of the application.
And now comes the interesting part. Homeowner policies usually exclude coverage for damage caused by floods, high water, waves and storm surges. So if this ruling holds, it means that the $28 billion paid in insurance claims from hurricanes Katrina and Rita actually covered only a small amount of the total damage. That means we are set for some really interesting times ahead.
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