Hurricane Katrina Coverage Litigation

Call it professional jealousy that someone else has such an interesting case to try, call it the same urge to look that slows up traffic when there is an accident over by the side of a road, call it simply a professional interest in a fascinating insurance coverage dispute, but I am fascinated by the trial that began yesterday in federal court in Mississippi arising out of the wind and storm damage caused by Hurricane Katrina. In it, well known plaintiffs' attorney Richard Scruggs is claiming that Nationwide Mutual Insurance Company wrongly denied coverage of damage to the plaintiffs' home. In a nutshell, Nationwide argues that "while wind damage is covered by its homeowners' policies, damage from flooding is excluded, including Katrina's wind-driven storm surge." The plaintiffs counter that, one, the agent misled them into not purchasing a flood policy and, two, the damage was in any event predominately wind damage, with their lawyer arguing that:

weather data shows Katrina's 140 mph wind hit the Mississippi coast three hours before any storm surge flooding [and that] Nationwide's experts ignored that evidence and wrongly blamed water for the vast majority of the damage to the [plaintiffs'] house.

The case is expected to be a bellwether for thousands of other suits making similar claims:

The trial, being heard without a jury by U.S. District Judge L. T. Senter Jr., is the first among hundreds of lawsuits that have been filed by Gulf Coast homeowners challenging insurance companies over the wind-verses-water issue. Plaintiffs' attorneys hope a ruling in the homeowners' favor would pressure insurance companies to pay out hundreds of millions of dollars in settlements for homeowners whose claims have been rejected.


Law.com has the story here, the Washington Post here, and the New York Times here.