Allstate Spokesperson Challenges Mississippi Attorney General Hood’s Lawsuit

September 21, 2005

Allstate Corp. has issued a direct challenge to the lawsuit filed last week by Mississippi Attorney General Jim Hood in which it refutes the charges made by the attorney general.

On Sept. 16, Hood sued Allstate Property and Casualty Co., Nationwide Mutual Insurance Co., State Farm Fire and Casualty Co. and United Services Automobile Association as defendants, arguing that their flood exclusions should be voided and that they should pay flood claims.

After Hood initiated his suit, other Mississippi officials, including the governor and insurance commissioner weighed in on the topic.

Allstate spokesperson Laura Margolis told Insurance Journal:

“The exclusions related to flood in our property insurance policies in Mississippi have been approved for use in that state by the state insurance department and have been in place for years. (Note: the flood exclusion also have been approved and in use for years in Louisiana and Alabama.)

“To now seek to retroactively impose on insurers an obligation to pay for losses that were not contemplated under the contract and for which no premium was collected violates not only core constitutional principles but ordinary concepts of fairness and concepts that are at the very core of the insurance contract and the insurance process.

“With few exceptions, insurance coverage for flooding has been the exclusive province of the federal government and has been since the 1960’s. Presumably, those not covered by National Flood Insurance Program policies will be eligible for FEMA and other financial relief.

“It has been well established for over half a century that losses caused by flood are not covered under most property insurance polices. Allstate’s exclusions have been carefully drafted and the applicability of these exclusions is a matter of well-settled law in Mississippi and elsewhere. We expect to prevail in this action filed by the Mississippi Attorney General but we do not know how long it will take for that to occur.

“This litigation is not the answer to helping victims of Katrina who suffered losses caused by flood. We encourage the attorney general and other interested parties to come together to develop and implement programs that will quickly and efficiently provide financial assistance to those affected by this terrible catastrophe.

“In the meantime, Allstate will continue to resolve claims as swiftly as possible.”

Nationwide Mutual Insurance Company also issued a statement it hopes will set the record straight regarding Hood’s accusations that insurance adjusters attempted to cheat Hurricane Katrina survivors out of millions of dollars in homeowner’s claims.

“Nationwide wants to set the record straight,” information received by Insurance Journal from the company said. “The allegations made by the Mississippi attorney general are unfounded. Our company is absolutely not asking policyholders to acknowledge damage is flood related in order to receive a check for living expenses. No such form or activity is sanctioned by Nationwide, nor does Nationwide own any company called Nationwide Flood Insurance Company as noted in the legal action.

“We are deeply disappointed with the allegations by the Mississippi attorney general against well-established flood exclusions contained in policyholder language. If these long recognized and relied upon exclusions were to be deemed null and void, it would have a significant negative impact on insurance policyholders across the country. There is a federal flood insurance program available to all individuals who desire to purchase this coverage.

“As we have consistently said, Nationwide will continue to investigate each claim presented to it on its own merits before making any coverage decision.”

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