Judge: Policy exclusions not OK
By Associated Press
GULFPORT , Miss. — Provisions in a State Farm Fire & Casualty Co. policy that excludes certain damage from Hurricane Katrina are unenforceable, a federal judge in Mississippi has ruled.
A couple whose Long Beach home was damaged by the Aug. 29 storm is suing Bloomington-based State Farm for denying their claim, arguing that the wording of their policy's "flood exclusions" are ambiguous and cannot be enforced.
U.S. District Judge L.T. Senter Jr., in a ruling released Wednesday, said the terms of State Farm's policy were unclear and ambiguous in excluding damage from "tidal waters," which inundated thousands of homes when Katrina pushed ashore from the Mississippi Sound.
State Farm cannot rely on "ambiguous" policy language to deny coverage for wind and rain, Senter said.
Senter denied a State Farm motion to dismiss the lawsuit. No trial date has been set in federal court in Gulfport.
Senter said the question of how much damage to the couple's home was caused by wind and water is a fact that must be decided at trial.
"Of course, I cannot know at this juncture what the evidence will be," Senter wrote. "But it is my opinion, upon a thorough review of the terms of the State Farm policy, that the damage attributable to wind and rain will be covered, regardless of whether an inflow of water caused additional damage that would be excluded from coverage."
The lawsuit, filed in November by John and Claire Tuepker of Long Beach, is one of many spawned by a fierce debate over whether Gulf Coast homes were destroyed by Katrina's wind or tidal water.
In a similar case involving Northbrook-based Allstate Insurance Co., Senter ruled in April that Allstate's policy exclusions were enforceable. He said Allstate's exclusions were "drawn quite broadly, and they have the clear purpose of excluding damage caused by inundation from coverage."
A number of lawsuits related to wind verses water damage are pending in state and federal courts.
Richard "Dickie" Scruggs, a high-profile attorney who represents many plaintiffs against the insurance companies, is also suing Metropolitan Life Insurance Co., Nationwide Mutual Insurance Co. and United Services Automobile Association.
In the State Farm case, Senter said Wednesday that the insurance company could be liable for the entire loss if the Tuepkers' attorneys can prove a State Farm agent misrepresented the policy as covering all hurricane damage.
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
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