Mississippi Supreme Court Hears Katrina Wind vs. Water Insurance Case

A Texas-based insurer should not have to pay for hurricane damages to a Mississippi home caused by a combination of wind and water, company attorneys told the Mississippi Supreme Court this week.

Greg Copeland of Jackson, attorney for United Services Automobile Association, said the company does not pay for damage caused by water, either alone or in combination with wind, under an exclusion written into the homeowner policy of Margaret Corban and her husband, Magruder, for their Long Beach home.

The Corbans want the Mississippi court to force USAA to pay for all damage to their home from Hurricane Katrina in 2005 because they contend wind destroyed their property before the storm surge arrived.

Judy Guice of Biloxi, representing the Corbans, said USAA must be required to prove what damage was caused by water before it can refuse to pay the Corbans.

Guice said under the Corbans’ policy, if USAA cannot prove whether wind alone, or water alone or the two together caused the damage, then USAA should be required to pay the claim.

Some of the most contentious insurance lawsuits spawned by Katrina dealt with properties that were reduced to slabs, making it difficult to determine if wind or water was responsible for damage.

Insurance companies say their homeowner policies cover damage by a hurricane’s wind but not its rising water, including wind-driven storm surge. Insurers also have maintained that damage from a combination of wind and flood water can be excluded from coverage by “anti-concurrent cause” language in their policies.

In a case against State Farm Fire and Casualty Co. after Hurricane Katrina, U.S. District Judge L.T. Senter Jr. in Gulfport, Miss., ruled that this clause is ambiguous and can’t be enforced. In 2007, however, the 5th U.S. Circuit Court of Appeals in New Orleans reversed Senter’s ruling and upheld that policy language in cases where wind and water damage can be segregated.

Copeland said the Mississippi court should follow federal precedent and rule out coverage for hurricane damage caused by a combination of wind and water. Guice said the precedent is a break from Mississippi law.

The Corbans contend tgat wind destroyed their property before the storm surge arrived, but USAA says the surge washed out the first floor of the home, with only mild wind damage to the second floor.

The Corbans have collected $350,000 in flood insurance. Their home was insured for more than $1 million. USAA has paid them almost $40,000 for wind damage to the house and an outbuilding, plus $40,000 in other coverage.

Harrison County Circuit Judge Lisa Dodson followed the 5th Circuit’s ruling in the case, but said a commonsense reading of the insurance clause indicates to her that only water damage is excluded from coverage.

Dodson agreed to allow the Corbans and USAA to appeal her ruling to the Mississippi Supreme Court. Once the Supreme Court rules, the case would go back to Harrison County for a determination of whether the Corbans are owed any additional money once the causation issue is resolved.