In response to a recent pending settlement involving State Farm Insurance, certain victims of Hurricane Katrina and the State of Mississippi, USAA or United Services Automobile Association, came forward to define what it says is a difference between it and State Farm.
According to USAA, when it adjusts claims in which there is both wind and flood damage, it pays for damage that was caused by wind.
“This approach has served our members well and we will continue to use it until the last hurricane Katrina claim is closed,” said USAA Spokesman David Snowden. “Because flooding is not covered by homeowners policies, USAA encourages all of its members to seriously consider purchasing flood insurance.”
USAA said it disagrees with a recent public statement by Mississippi Attorney General Jim Hood challenging the way USAA and a number of other property and casualty insurers handled Hurricane Katrina claims, specifically suggesting that storm surge should be covered in standard homeowners policies, USAA disagrees.
“Storm surge is considered a flood by the United States government, state governments, judges and businesses – as well as by insurance companies,” Snowden said. “For decades, damages caused by flood have not been covered by standard homeowners policies. For decades, state governments have approved the policy language excluding damage caused by flooding. In fact, the Mississippi Department of Insurance has approved the very language Attorney General Hood questions.”
Snowden cited congressional creation of the National Flood Insurance Plan of 1968, saying the FEMA-run program pays flood claims including those caused by storm surge.
“Courts throughout the country regularly have upheld policy language that excludes damage caused by flooding,” Snowden said. “Since the early 1970s, the Mississippi Supreme Court (in the aftermath of Hurricane Camille) has held that damage caused by storm surge associated with a hurricane is not covered by homeowners insurance policies.”
In reference to a recent Mississippi case presided over by U.S. District Court Judge L. T. Senter Jr., the same judge involved in the State Farm settlement, Snowden said Senter “confirmed that homeowners insurance policies do not cover flood damage. He also held that losses caused by storm surge from Hurricane Katrina were not covered (Buente v. Allstate, April 12, 2006).”
Snowden said USAA encourages all of its members to seriously consider purchasing flood insurance. He added that the cover page of USAA’s homeowners policy packet clearly states that the policy does not cover the ‘Peril of Flood,’ and provides contact information for the National Flood Insurance Program.
USAA also disagrees with Hood’s contention that USAA handles claims like State Farm does, and that USAA should enter into a settlement with the AG based on his claim.
“From day one, USAA has adjusted Hurricane Katrina claims responsibly, and we will continue to do so until every claim is closed,” Snowden said. “According to media reports (Times Picayune, LA eyes State Farm case), State Farm reportedly declined coverage for both wind damage and water damage if any damage to a residence was due to flooding.”
Snowden said USAA’s approach is to evaluate each claim individually and on its own merit. He said when USAA adjusts claims in which there is both wind and flood damage, the company pays for damage that was caused by wind.
Snowden said Hood’s claim that USAA has treated its Mississippi members unfairly is “not true.”
“USAA already has paid more than $217 million to more than 17,000 USAA members in Mississippi for hurricane Katrina losses,” Snowden said. “After the storm (Hurricane Katrina), more than 200 USAA associates worked seven days a week serving members affected by Hurricanes Katrina and Rita.”
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