Allstate Says It Paid Katrina Claims of Type State Farm Denied

February 15, 2007

  • February 15, 2007 at 8:34 am
    Bill says:
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    Shaun, I\’m confused. You say your house was destroyed although the walls and the roof were standing, and Allstate denied you claim 100% even though their engineers stated the winds were over 145 mph.

    What exactly did the damage? The wind or, perhpas, storm surge?

    They were correct if the damage was clearly from the surge. Did you have flood insurance?

    State Farm denied wind damage if there was also flood damage, even if the wind damage occurred first, which is despicable.

    The solution? Always buy your flood coverage from your homeowners insurer.

    A major problem with the Gulf Coast storms was that the federal definition of flood does not contemplate flood from storm surge. Consequently many people were not in a flood zone according to the federal definition but were seriously exposed to surge.

    Some who were right on the beach didn\’t buy flood because their elevation meant they weren\’t subject to flood originating from falling water. But who in their right mind would live right on the beach and not buy flood.

  • February 15, 2007 at 4:25 am
    William says:
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    This is the course that USAA also took. Unfortunately, Nationwide and Statefarm took a hard line stance and they are the brunt of the lawsuits which have been filed.

    USAA and I came to a resonable settlement. Resonable because we both agreed that water and WIND caused the damage and paid out as such.

  • February 15, 2007 at 5:14 am
    Sheba says:
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    Here\’s the law that Alaska (where we have earthquakes!) adopted couple years ago: \”An insurer may not deny a claim if a risk, hazard, or contingency insured against is the dominant cause of a loss and the denial occurs because an excluded risk, hazard, or contingency is also in a chain of causes but operates on a secondary basis.\” Other insurers would have been well advised to follow Allstate\’s example…

  • February 15, 2007 at 5:28 am
    Is it covered? says:
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    So, in Alaska, if an earthquake or other cause that is an excluded peril, destroys something and THEN the fire starts, the carrier still has to pay the full value of the policy?

  • February 15, 2007 at 5:43 am
    Sheba says:
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    Right. Here\’s a summary of the Supreme Court case holding the opposite. This law change legislatively reversed the high court. Believe it or not, we still have P/C insurers willing to write coverage up here:

    \”A home owned by Jerome Bongen and Elizabeth Bongen was destroyed by a mudslide. After their insurer denied coverage, the Bongens sued. They alleged that the mudslide was caused by construction activity carried out above their property. On cross- motions for partial summary judgment, the superior court held that a provision in the Bongens\’ insurance policy excluding from coverage any loss resulting from earth movement, regardless of the cause, was unenforceable. We reverse.\”

  • February 15, 2007 at 5:54 am
    shaun says:
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    Allstate claims they handled there claims differently, although this is not true. My home in Mississippi was destroyed although there were walls and a roof remaining their engineers report only mentioned that the prevailing winds were in excess of 145 mph the claim was denied 100% I had a HURRICANE POLICY ENDORSEMENT and was not in a flood zone. ALLSTATES WORDS ARE PROPAGANDA.

  • February 16, 2007 at 11:45 am
    Bob says:
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    The comments from Allstate may be true, but I do not think the two company\’s policies are worded the same way. Where Allstate may be allowed to afford partial coverage for wind damage when mixed with the Flood peril, State Farm\’s policy is clear that is not allowed, and mixed perils of these sort are not covered at all for either peril. I suggest buying the Allstate policy as it obviously better in this instance. However, many people bought the State Farm policy, and had to suffer the consequences. . . until they sued to obtain the Allstate style policy coverage.

    State Farm appears to have made some errors during Katrina which may or may not have been intentional, but which definately hurt some policyholders. State authorities, who should know better, used these otherwise minor errors to pressure State Farm to allow coverage for homeowners even though their policy specifically forbids coverage. State Farm, realizing the cost to defend the mostly baseless demand for \”coverage for all\” would be too expensive in legal and public relations costs, is now accepting to pay for these losses.

    However State Farm also understands that the authorities knew what was right, but grandstanded for the people to unjustly collect from the big-pocket insurance company. This advocacy by the authorities for wrong over right will mean that State Farm will have to pull out of the area. An insurance company cannot stay in business if have to insure and pay for losses from perils for which they have never collected premiums.

    State Farm should have to compensate the people they wronged, intentionally or not. The should not have to pay everyone for mistakes made against a few. They are a mutual company, owned by all of the policyholders, with profits going back to the policyholders. With the onslaught of this suit, all policyholders will suffer with higher premiums, non-renewals, or withdrawal from the market.

  • February 16, 2007 at 2:20 am
    Temblor says:
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    Bob is correct. State Farm\’s form says that if wind damage occurs first, then flood damage which would have caused the same damage as the wind already did, then they are not liable for the wind damage.

    Thus if a policyholder had wind and flood damage, but no flood coverage, they have no coverage in this instance.

    This first is a violation of the principle of proximate cause and secondly is a despicable move on their part. Talk about screwing your policyholders!

    However, this wording was filed with, and somehow approved by the various state insurance departments. How did they overlook such a thing? the wording should never have been approved in the first place.

    Allstate\’s wording says if there is wind damage first, we cover it, even if there is later flood damage.

    Obviously anyone near the coast should recognize that storm surge can happen and should buy flood coverge, even if they are not in a \”designated flood plain\” which definition only encompasses flooding resulting from falling water, not from storm surge.

    And, if at all possible, they should buy the flood coverage from their homeowner\’s insurer. That way there can be no arguing about who owes what to whom. True, the homeowner\’s insurer may have to argue with the feds over who pays what part, but that problem should not affect the homeowner.

  • February 17, 2007 at 8:06 am
    William says:
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    Damn Bob, that was a well thought out and reasonable response. One which I totally agree. What Senter has ruled is that the concurrent causation clause is ambiguous and unenforcible. And in the Broussard case basically said since they ( SF ) admitted wind damage but failed to prove percentages, he awarded full policy limits. In my personal case USAA settled for about half of my structure and contents coverage. It was, with the evidence I submitted a fair settlement in my estimation.

  • February 17, 2007 at 8:08 am
    William says:
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    And thus the lawsuits, and thus Judge Senter saying …yep it may have been approved, but its not legal because MS has an anti concurrent causation statute, and precedent to back it up.



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