NationStates Jolt Archive

This really burned me when I read about it. How can anyone justify suing for an insurance company to pay for flood damages when these same damages were excluded from the policy. Looks like another pack of greedy lawyers got together with some greedy government officials and decided to rape the insurance industry.

From the WSJ Opinion page (http://www.opinionjournal.com/editorial/feature.html?id=110007314) we read of the latest assault on free enterprise.

President Bush has promised to rebuild the Gulf Coast "higher and better" than before. But that task is going to be far more difficult if Mississippi Attorney General Jim Hood and his tort lawyer pals succeed in rewriting private insurance contracts after the hurricanes have hit.

For decades private insurers have had flood exclusions in their contracts--which is one reason the federal government decided to offer its own flood insurance. Yet Mr. Hood now says these exclusions are "unconscionable," and he is suing private insurers to cover all of Katrina's costs. Hot on his heels is tort kingpin Dickie Scruggs, whose own home was damaged and who promises to sue the industry for what he claims are deceptive business practices.

Meh.

I don't have time or the inclination to teach you contract or tort law. There is such a thing as an "unconscionable" contract or contract provision --- particularly with insurance.

Insurance is one of the most profitable industries in American and one of the most litigitious.

So far all it sounds like is someone may file a lawsuit about the validity of the insurance policies. The poor little insurance companies will have to scrape together the resources to defend their righteous contracts.

Cry me a river.

Meh.

I don't have time or the inclination to teach you contract or tort law. There is such a thing as an "unconscionable" contract or contract provision --- particularly with insurance.

Insurance is one of the most profitable industries in American and one of the most litigitious.

So far all it sounds like is someone may file a lawsuit about the validity of the insurance policies. The poor little insurance companies will have to scrape together the resources to defend their righteous contracts.

Cry me a river.
So when my policy specifically excludes flood damage from the list of covered damages, I'm really still covered for flood damage. Isn't that what these guys are arguing?

I didn't know profitability was a factor in determining liability.

My two cents on this, having nothing to do with living in New Orleans, but rather in a small, rural Canadian town...I literally can not get an insurance company that will insure my home for flooding. This, despite the fact that the year before I bought this house, my town was flooded so badly that nearly 60 of the homes suffered major flood damage. Apparently, it doesn't 'happen' around here, so I would have to find an insurance company IN A DIFFERENT PROVINCE to insure me for flooding. If the sewer backs up...that's covered...but water pouring in through the basement windows, as happened to my house the summer before I bought it, is just an 'act of God' that they refuse to insure for. Homes have been flooded here on a regular basis for the past four years...and people are so sick of fighting their insurance company about it, they're selling and moving somewhere more sane.

This caught my eye:

Wading through this muddled thinking takes some effort, but the first thing to understand is why insurers have flood exclusions. The simple reason is that floods are not a typical insurable risk. The entire point of insurance is to spread risk by collecting premiums from a large group of people who pay into a pool, which is then used to compensate the relatively few who suffer accidents. Floods don't work that way. The only people who buy flood insurance are those who are very likely to be flooded, making it impossible to spread risk. Floods also tend to wipe out entire regions, causing extraordinary losses. And they often result in repeat losses, because people rebuild in flood-prone areas.
Not a typical insurable risk? In a city that was built below sea level? You know where else flooding is not seen as a typical insurable risk? Towns and cities along the banks of rivers and lakes prone to flooding...how stupid is that?

Ah, one thing I should add...flood insurance is usually a very high premium (for the reason given that the cost can not be spread out, etc. etc.) Regular home insurance can be affordable, but in my case, the company I contacted out of province was going to charge me such a high premium, that were we to be flooded again, it would likely be cheaper to save that money and just pay for the damn damages ourselves. I pay $500 in home insurance a year...the extra flood insurance was going to be $250.

tens of thousands of familes, maybe hundreds of thousands of families will not be able to rebuild their homes because of this flood. i dont find it unconscionable at all that the attorney general of mississippi should give it a go. i dont know that they can succeed but at least they can try.

Not a typical insurable risk? In a city that was built below sea level? You know where else flooding is not seen as a typical insurable risk? Towns and cities along the banks of rivers and lakes prone to flooding...how stupid is that?
It is unprofitable to insure houses in a flood zone for flooding.

Ah, one thing I should add...flood insurance is usually a very high premium (for the reason given that the cost can not be spread out, etc. etc.) Regular home insurance can be affordable, but in my case, the company I contacted out of province was going to charge me such a high premium, that were we to be flooded again, it would likely be cheaper to save that money and just pay for the damn damages ourselves. I pay $500 in home insurance a year...the extra flood insurance was going to be $250.
Those are the kind of rates I pay. I don't pay for flood insurance because odds are way against any flooding in my house.

Now, as the opinion column pointed out, there is subsidized Federal flood insurance available. John Stossel wrote a pretty good column (http://abcnews.go.com/Business/Insurance/story?id=94181) about why it's bad for the Federal government to offer insurance. That's beside the point. The interesting part was that the government would continue to rebuild his house as often as it got flooded. I wouldn't expect my insurance company to continually replace my car if I were extremely prone to accidents, so why should floods be different?

All I know for sure is that flooding is not a covered "peril" on my insurance policy.

I guess you should get Cat-Tribe to sue your insurance company for the damages that you incurred.

What I don't understand is how someone can get a mortgage in a flood zone without flood insurance. Seems like the mortgage companies are the ones that should carry the bulk of the blame.

It is unprofitable to insure houses in a flood zone for flooding.
Of course it is. It makes much more sense to offer insurance for things that will likely never happen...like a blizzard in Las Vegas. Or a flood in the Atacama. Or a friggin hurricane in Saskatchewan. F*ckers.

Those are the kind of rates I pay. I don't pay for flood insurance because odds are way against any flooding in my house.

Now, as the opinion column pointed out, there is subsidized Federal flood insurance available. John Stossel wrote a pretty good column (http://abcnews.go.com/Business/Insurance/story?id=94181) about why it's bad for the Federal government to offer insurance. That's beside the point. The interesting part was that the government would continue to rebuild his house as often as it got flooded. I wouldn't expect my insurance company to continually replace my car if I were extremely prone to accidents, so why should floods be different? What I'm not clear on is the federal insurance...is it going to cover the damage or not? Is it above the means of homeowners to afford? Etc. If people are not getting the insurance because it would be a huge jump in rates...and they simply can't afford it, there is a problem with the rates.

All I know for sure is that flooding is not a covered "peril" on my insurance policy.

I guess you should get Cat-Tribe to sue your insurance company for the damages that you incurred. :rolleyes: Yeah...just like anyone who doesn't immediately jump on your little bandwagon.

tens of thousands of familes, maybe hundreds of thousands of families will not be able to rebuild their homes because of this flood. i dont find it unconscionable at all that the attorney general of mississippi should give it a go. i dont know that they can succeed but at least they can try.
Even though they didn't have any private insurance against flooding, they should get claims paid by their insurance companies. Why? Because it sounds like a nice, fair thing to do?

If an insurance company misled or decieved an insured into thinking that he was covered for flooding, that's one thing. But a good mortgage company would never let that happen. So, it's doubtful there is any legal reason that the insurance companies should have to pay for uninsured damages.

What I'm not clear on is the federal insurance...is it going to cover the damage or not? Is it above the means of homeowners to afford? Etc. If people are not getting the insurance because it would be a huge jump in rates...and they simply can't afford it, there is a problem with the rates.

Yep, it's subsidized by the government. FEMA manages the program (http://www.fema.gov/nfip/). They usually offer it via commercial companies.
This is what USAA offers.

Flood Insurance
Protect your home from flooding

Did you know that homeowners insurance does not cover all types of water damage? To increase your protection, consider flood insurance. It will pay for damage resulting from:

* The overflow of inland or tidal waters.
* The unusual and rapid accumulation or runoff of surface waters.
* Mudflows on land that is normally dry.

USAA offers two types of policies

Through an agreement with the National Flood Insurance Program (NFIP), we offer two types of policies:
Standard Policy

For communities with stringent flood controls, the program offers $250,000 of insurance for your home and $100,000 of coverage for its contents.
Preferred Risk Policy

A preferred risk policy is designed for homeowners in moderate- to low-risk areas. Coverage ranges from $20,000 to $250,000 for your home and $8,000 to $100,000 for its contents.

:rolleyes: Yeah...just like anyone who doesn't immediately jump on your little bandwagon.
???

Even though they didn't have any private insurance against flooding, they should get claims paid by their insurance companies. Why? Because it sounds like a nice, fair thing to do?

If an insurance company misled or decieved an insured into thinking that he was covered for flooding, that's one thing. But a good mortgage company would never let that happen. So, it's doubtful there is any legal reason that the insurance companies should have to pay for uninsured damages.
the court will decide if its fair or not. i dont have a problem with their trying to save the homes of tens of thousands of families

As far as I understand it, this current beef against the insurance companies is not that they don't cover floods but that they are classifying hurricane damage as flood damage. Hurricanes and other types of storms are covered by homeowners policies. Homeowners in NO wouldn't have claims because they were flooded. But homeowners in Mississippi are saying that the storm surge is part of the hurricane and should be covered, while the insurance companies are saying no, no, that was a flood and is not covered.

This is the sort of thing lawyers are *supposed* to sort out.

PS: I'm siding with the homeowners.

Myrmidonisia, you know as well as I do that there is no bad news without good news for some lawyer.

What ever happened to both sides of a contract reading it?


...and signing it? Doesn't that mean that they are agreeing to the terms? At least that was how we learned it in contract law. It seems a bit odd to me that a contract is only binding until someone who purposely stated that they were of sound mind and body decides (in sound mind and body) that they weren't in sound mind and body at the time and agreed to 'unconsciably' (if thats a word) bargain and purchase against themselves.

Of course, some of us didn't believe the big warnings written on cigarette packages either. We should make others pay for our ignorance in that matter also. Personal responsibility? Whats that?

Deep Pockets baby! Squeeze em till Nobody can ever afford insurance...that will teach em!

Be well

???
Sorry...I just didn't like that you jumped from me bitching about insurance to the idea that I would suddenly want to go sue someone. It's just so damn un-Canadian! :p

Sorry...I just didn't like that you jumped from me bitching about insurance to the idea that I would suddenly want to go sue someone. It's just so damn un-Canadian! :p
My apologies, too. We're so litigious that it just seems like the thing to do. I guess I'm a little touchy over lawsuits, too. A past tenant just sued me over $200 that I withheld from her security deposit. I won, but having to take vacation to go to Magistrate's Court probably cost me more than if I had just paid her the money.

What I'm not clear on is the federal insurance...is it going to cover the damage or not? Is it above the means of homeowners to afford? Etc. If people are not getting the insurance because it would be a huge jump in rates...and they simply can't afford it, there is a problem with the rates.


I don't think that federal flood insurance actually covers all that much. From what I have heard, it's pennies on the dollar.

My apologies, too. We're so litigious that it just seems like the thing to do. I guess I'm a little touchy over lawsuits, too. A past tenant just sued me over $200 that I withheld from her security deposit. I won, but having to take vacation to go to Magistrate's Court probably cost me more than if I had just paid her the money.

I had a landlord take me to court over no money at all. Well, arbitration anyway. I didn't need to hire a lawyer but I did have to take a day off. I stated my case myself and won, but no one paid me for the waste of my time. Maybe if accusors had to pay up if they didn't win we'd have fewer frivolous claims (on either side of the border).

Stupid petty people are petty everywhere. What I don't understand is why do they go through with this stuff when surely they must know they won't win.

My apologies, too. We're so litigious that it just seems like the thing to do. I guess I'm a little touchy over lawsuits, too. A past tenant just sued me over $200 that I withheld from her security deposit. I won, but having to take vacation to go to Magistrate's Court probably cost me more than if I had just paid her the money.
I should be a bit more litigious myself...I had a landlord squeeze $1400 out of me on false pretexts but I couldn't bear the stress at that time of making an issue of it, when they'd already sicked a collection agency on me.

Moneygrubbing bastards all should get a big ass paddling. Just have some fricking integrity![/rant]

Don't you worry about those poor little insurance companies! They will litigate every issue to the nth degree in an effort to drive the homeowners and their big bad attorneys into bankruptcy.

The two sides of the insurance contract are completely unequal. That is why there are statutes in place to protect the insured. Among those statutes, typically, are fair claims practices acts and unfair and deceptive trade practices acts. The punitive penalties allowed against insurance companies under these acts are steeeeeeeep. And they should be, because the buggers keep violating these acts routinely.

Insurance Companies Are the Devil!

The other thing I need cleared up...is this like in my case, where you actually CAN'T get flood insurance? Or is it as has been suggested that you CAN, but the hurricane flooding doesn't count as flooding...OR is it that some people just didn't get the flood insurance (possibly because of very high premiums)?

In any case, this is not about negotiating contracts. The average person can hardly read through the legalise of one of those damn insurance contracts...much less 'negotiate' the terms. Especially if that kind of contract is the standard among the companies available. You say, "I want these terms changed" and they say "HAHAHAHAHAH!". If the companies are using loopholes to get out of paying (it wasn't a flood...it was a hurricane!) then yeah, some fancy lawyer should use loopholes like saying the water damange was caused by the wind to get around it. Use a loophole to fix a loophole...and then make damn sure the terms are less able to be manipulated later on.

ditto. "Wind driven rain" is a covered peril under most homeowner's insurance policies. flood is not. So was the damage to the second floor of the home from "wind driven rain" or flood. Also, these companies are going to be arguing which damage came from which hurricane. It happened where I live. We had a hurricane in late August, two in early September and one in early October of 1999. People filed claims under their policies and were denied on the basis of not being able to prove to the insurer's satisfaction which storm did the damage! The lawsuits that resulted were amazing. I know of at least one lawsuit still ongoing from a 2000 claim. That lawsuit has another 2 years or so before it will make it to a jury.

ditto. "Wind driven rain" is a covered peril under most homeowner's insurance policies. flood is not. So was the damage to the second floor of the home from "wind driven rain" or flood. Also, these companies are going to be arguing which damage came from which hurricane. It happened where I live. We had a hurricane in late August, two in early September and one in early October of 1999. People filed claims under their policies and were denied on the basis of not being able to prove to the insurer's satisfaction which storm did the damage! The lawsuits that resulted were amazing. I know of at least one lawsuit still ongoing from a 2000 claim. That lawsuit has another 2 years or so before it will make it to a jury.
And these lawsuits mostly have to do with the classification of the NO storm surges as floods or as storm driven rain.

I don't think that federal flood insurance actually covers all that much. From what I have heard, it's pennies on the dollar.
My only experience with it is the John Stossel column that I linked in earlier. Apparently, the Fed will pay for your house to be rebuilt as many times as necessary. Seems like a silly way to run an insurance company, but that's government. In the column, a former FEMA director states that offering subsidized insurance is cheaper than disaster relief (read welfare).

Every house I've bought had a flood zone determination. If you were in a flood zone, the lender required flood insurance. I don't see how it can be optional for anyone that has a loan on the property.

I had a landlord take me to court over no money at all. Well, arbitration anyway. I didn't need to hire a lawyer but I did have to take a day off. I stated my case myself and won, but no one paid me for the waste of my time. Maybe if accusors had to pay up if they didn't win we'd have fewer frivolous claims (on either side of the border).

Stupid petty people are petty everywhere. What I don't understand is why do they go through with this stuff when surely they must know they won't win.
One of the things I give every tenant is a copy of the Georgia Tenant-Landlord law. It's in a nice FAQ format and very readable. I only have a couple tenants, but it does cut down on misunderstandings.

The lawsuit came from a tenant that worked in a law office. I can't imagine that the lawyers told her to sue; litigation must be infectious.

I can't imagine that a lawyer told her to sue either. As a group, lawyers have gotten a really bad rap. Most lawyers work really hard and are quite scrupulous.

My only experience with it is the John Stossel column that I linked in earlier. Apparently, the Fed will pay for your house to be rebuilt as many times as necessary. Seems like a silly way to run an insurance company, but that's government. In the column, a former FEMA director states that offering subsidized insurance is cheaper than disaster relief (read welfare).

Every house I've bought had a flood zone determination. If you were in a flood zone, the lender required flood insurance. I don't see how it can be optional for anyone that has a loan on the property.
What constitutes a flood zone varies a bit from state to state, and anyway "flood zones" are kind of a myth because if a flood is big enough, it doesn't stick to its zone. That's why you see all those tv ads urging all property owners to get flood insurance, just in case.

The definition of flood is the issue. The definitions in policies of the different kinds of "casualties" are quite vague. After a casualty occurs, the insurance companies will start trying to weasel out of paying claims by redefining the event into something that's not covered. Thus, if the storm surge would be covered, it gets redefined as a flood, which is not covered. That's what claim examiners do, you know -- look for ways to get the insurance company off the hook for paying. This, and the lawsuits, are just business as usual.

What constitutes a flood zone varies a bit from state to state, and anyway "flood zones" are kind of a myth because if a flood is big enough, it doesn't stick to its zone. That's why you see all those tv ads urging all property owners to get flood insurance, just in case.

The definition of flood is the issue. The definitions in policies of the different kinds of "casualties" are quite vague. After a casualty occurs, the insurance companies will start trying to weasel out of paying claims by redefining the event into something that's not covered. Thus, if the storm surge would be covered, it gets redefined as a flood, which is not covered. That's what claim examiners do, you know -- look for ways to get the insurance company off the hook for paying. This, and the lawsuits, are just business as usual.
Insurance companies are not nice to deal with. I haven't had a pleasant experience yet and my company is one of the better ones. That's probably why this suit was initiated and why it hasn't been dismissed as the frivolous waste of time that it is. I don't know about 'most' policies. Mine is pretty darn clear about what's excluded. In fact, the very first page of my policy states that floods are not a covered peril.

Surely the only reason for this suit is money. Money because the majority of people wanted to save a few hundred dollars and didn't buy flood insurance. Money because the state of Mississippi has other plans for the federal disaster aid. Money because a smart lawyer sees an unpopular industry that he can shake down.