The Mississippi Department of Insurance has been the moderator for numerous Hurricane Katrina victins claiming that damage to their property was caused by wind, not flooding; and according to Commissioner George Dale, many of the claims have been settled in favor of the policyholders.
Dale told the Northeast Mississippi Daily-Journal that two months after the most devastating hurricane in Mississippi history struck, more than $3 billion in insurance claims have been paid.
Nevertheless, he said many homeowners are still wrangling with their insurance companies for reimbursement.
Dale said his office has fielded thousands of calls from dissatisfied policyholders, many of whom he’s been able to help, but many whose claims will go unpaid.
“I’m in a no-win situation,” Dale told the Daily-Journal. “The compassionate part of me wants everybody’s claim to be paid.” A reading of policy terms in many instances, however, clearly states that if the loss results from water damage, the standard homeowner’s policy doesn’t cover it, he said.
Damage from Hurricane Katrina that resulted from storm surge and high water extended miles farther inland than the previously established coastal flood plain, so many homeowners had not bought federal flood insurance.
Dale said his office has advocated for homeowners in many instances to help them prove to the insurance companies that it was wind rather than water that caused the destruction.
Before Hurricane Katrina, people had used Hurricane Camille in 1969 as the gauge of whether they needed flood insurance. Katrina defied all earlier experience or models.
“People wonder why it’s just a problem this year,” Dale said.
His response: The direction from which Katrina struck, the tide and the tributaries of water came together in a mix that created storm surges of 12 or more feet that have never been seen before; the storm surge in some spots reportedly reached as high as 25 feet or more.
“All hurricanes do not have water surges, but this one did,” he said. “This is a new benchmark completely, and people are totally upset and frustrated, even accusing me of being in bed with the insurance companies.”
Among the methods Dale is pursuing to resolve claims is mediating between homeowners and insurers.
Before anything else, policyholders must file a claim with the carrier to seek a satisfactory settlement. If they’re not satisfied, the insurance department may be able to help.
“My office has caused a number of insurance companies to go back and make another offer to the insured,” he told the Daily-Journal. The department’s stance has been to the insurance companies that “every claim has some wind damage to it; if you cannot prove water damage, pay it.”
The insurance commissioner regulates insurance companies that operate in the state, but cannot dictate internal operations of these private businesses. His only tool is the working relationships he has forged with insurance companies.
If mediation doesn’t work, the claimant’s final recourse is the courts.
“Many times the claims are settled before they get to the courthouse steps, but under certain circumstances there is a place for legal action in the process,” Dale said. “My biggest job is to be sure claims are paid that are owed as quickly as possible, and to be sure there is an insurance market on the coast.”
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