USLegal Reporter

A three-judge panel of the 5th U.S. Circuit Court of Appeals ruled today that hurricane Katrina victims whose homes were destroyed when levees broke are not entitled to coverage under their homeowner insurance policies. The policies contained exclusions for coverage of water damage due to flooding.

The decision overruled a lower court decision that found the insurance policies’ exclusions were ambiguous, since they didn’t distinguish between flooding due to acts of God and those caused by man. The appeals panel found the distinction between the cause of flooding irrelevant and found the policies to clearly exclude all water damage due to flooding. Today’s ruling is expected to save insurers $1 billion.

Source:

http://www.msnbc.msn.com/id/20093139/

Allstate Insurance Company announced Monday its agreement to settle claims filed by Mississippi policy holders for coverage of damage to their homes caused by Hurricane Katrina. The insureds contended in their lawsuits that Allstate wrongfully refused coverage of damage resulting from storm surge, claiming instead that the policies only covered wind damage.

Neither Allstate nor attorneys for the policyholders have disclosed the terms of the agreement. An Allstate spokesman, Mike Siemienas, stated that Allstate had settled 99% of its Mississippi claims relating to Hurricane Katrina.

Source: http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20070626/NEWS/706260367/1001/news

Mississippi Attorney General Jim Hood filed a lawsuit on Monday against State Farm Fire and Casualty Company for an alleged breach of contract. Hood claims the insurance company has failed to honor a settlement of claims stemming from damage caused by Hurricane Katrina. 

Earlier in the year, Hood dropped a lawsuit against State Farm for it’s failure to cover damage caused by storm surge. He did so after State Farm had reached a $50 million settlement with more than 30,000 policyholders. However, a federal judge has refused to sign off on the settlement saying State Farm needs to provide more information regarding those who would benefit from the deal and how much money policyholders would be guaranteed.

The state is now seeking compensatory and punitive damages. 

Sources: http://www.ago.state.ms.us/pressreleases/statefarm/sfbreach.pdf , http://www.time.com/time/nation/article/0,8599,1631550,00.html