Mississippi Court Agrees to Hear Katrina Insurance Issue

May 22, 2008

The Mississippi Supreme Court will hear arguments on whether an insurance policy can be interpreted in a wind versus water dispute over Hurricane Katrina claims.

The lawsuit was filed in Harrison County Circuit Court by Margaret Corban and her husband against their insurer, United Services Automobile Association.

The Corbans claim USAA should cover wind damage to their property, regardless of damage caused by water. Water damage is excluded from coverage.

USAA and other insurers argue that policy language also excludes coverage for a combination of wind and water.

Both sides have asked the Supreme Court to resolve the issue before the case goes to trial. The Supreme Court granted the request this past week.

The 5th U.S. Circuit Court of Appeals in New Orleans sided with insurance companies, finding that policies bar coverage when wind and water act in sequence to destroy property.

The Supreme Court is not bound to follow the federal appellate court’s ruling, however, because state law governs insurance contracts.

The Corbans say wind destroyed their property before Katrina’s storm surge, but USAA says storm surge washed out the first floor. The company paid for what it considered independent wind damage to the second floor.

The court also said it will accept briefs from Policyholders of America on behalf of the Corbans and from Allstate for USAA.

Information from: The Sun Herald, http://www.sunherald.com

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