Should insurance companies honor policies for damage caused by wind driven water?

I live in Mississippi and am no stranger to hurricanes. Alot of home owners here who lost everything are being denied claims because insurance agents are claiming that flooding not wind driven water caused the extensive damage. While this may be true, alot of people in Mississippi purchased supplemental "hurricane" insurance and were under the impression that any damage would be covered. Only in the fine print, written in lawyer-speak will you find the loophole. To top it off, alot of insurance agents discouraged flood insurance because, before Katrina, alot of people lived in areas zoned as no flood. I imagine people in La. are experiencing the same thing. So, the question becomes, should insurance companies honor their supplemental hurricane policies? Oh BTW, the industry has grossed $15 billion this year and has over $400 billion in capital according to Fox News.

 

I hate to be callous, but you've got to be a real knucklehead to BUY insurance, but not know WHAT you're buying. Now if the agents misrepresented the coverage to the consumer, that's a WHOLE other ballgame (and would involve a helluva lot more money than just actual damages.)

 

Really? I'm not trying to be confrontational, but have you ever read your full home owners policy from cover to cover? If so, did you comprehend everything?
My point was that alot of agents led people to believe that the supplemental hurricane insurance would cover any damage caused by the storm. In my book, wind driven water is wind damage, not flooding. The real issue is, if the hurricane wouldn't have happened, neither would the tidal surge.

 

Most companies make sure that they know that when they are buying hurricane insurance that "THIS IS NOT FLOOD INSURANCE."

That is something that could easily bring up a lawsuit (sound familiar) if there is any ambiguity.

 

Reputable carriers will likely be liberal in their interpretation of coverage. After a catastrophe like this one, they have a lot of claims to process in a short period of time and the Insurance Commissioners will be watching very closely. This is where reputations are made. Companies do not want bad publicity. The costs are passed on to the consumer only with the approval of the Public Service Commission.

Still, you don't pay what you don't owe. If water invaded the house from ground level, that's flooding. If the wind damaged your roof and rain damaged ceilings, fixtures, furniture above the water line, etc, that is consequential damage which should be covered. If you had floors ruined by flooding combined with invasive wind driven rain damage, and no flood insurance, then likely, you are going to "eat" the floor damage and get indemnified for everything else. Minus the deductible, of course.

 

That's an excellent point Red. Even though I live on the Gulf Coast, I am 20+ feet above sea level and am not in a legally designated flood zone. Even still, I told my agent I wanted a policy that would cover ANY damage caused by a hurricane. I was told about the supplemental coverage - which I might point out is a separate policy from my standard homeowners insurance. While I didn't specifically ask for flood insurance, I was led to believe the supplemental policy would cover any hurricane related damage; so you can understand why I feel a little betrayed and ripped off.

 

I think it will be an interesting court case... You could say that technically the water in New Orleans was flooding because it was caused by the broken levee, not the tidal surge... the water in St. Bernard, Plaquemine, Slidell, and Mississippi was not flooding because it was from water driven by wind. Also, I wont be suprised when people in new orleans sue the city, state, and fed for the substandard levees.

 

I'm sure there has been a court case somewhere that has already resolved this issue.

You should have carefully read your policies. If you were not sure you could have had an attorney review them. Agents have Errors and Ommissions coverage. If you really feel you were defrauded, file a claim. Be prepared to claim your own stupidity (I'm not kidding) as a defense.

 

I will never claim I was too stupid to know what I was doing, but I will claim that the policy is written in complicated legal jargon that I don't totally understand. I guess in retrospect I should have had an attorney review it, but I feel the agent misrepresented it. Why would I pay for supplemental hurricane coverage when the same exact damage is covered on a standard homeowner's policy? SF, it's very easy for you to sit in judgement when you have hindsight on your side, but the fact is, if you were in my shoes, you'd more than likely feel the same way. I guess every case will be different, but I think mine is very strong; particularly since I made it clear that I wanted total coverage; hence the agent selling me the supplemental policy.