Residents of the Gulf Coast region have had their coverage claims almost uniformly denied by their insurance companies, despite the fact that Big Insurance had a year of record-breaking profits. This serves as a reminder that when you are dealing with an insurance company, having legal representation is crucial.
How Big Insurance Avoided Responsibility in The Gulf Coast
It has been one year since Hurricane Katrina devastated the Gulf Coast. New Orleans is still dealing with a ruined city, and thousands of homes and businesses that were destroyed have yet to be replaced.
But some people seem to be having an easier time of it than others.
While individual homeowners are wrestling with their insurers for funds for rebuilding, the Northrop Grumman Shipyard in Mississippi is back up to speed and running at optimum efficiency. And that’s not the only bit of good news for them; the Federal Government will be cutting them a check for $500 million dollars to make up for the money they lost due to Hurricane Katrina.
You would think that it would be up to Northrop Grumman’s insurer to cover the losses, but the two parties are currently in litigation, and that could take years. Northrop Grumman has promised to reimburse the government for the funds in the event that they win their current case against their insurers, but there has been no discussion of what would happen to that money if they lose. So it looks like either way you cut it, Northrop Grumman will feel no real financial effects from Hurricane Katrina.
While that’s a positive turn of events for Northrup Grumman, those Americans that don’t own a multi-billion dollar plane, ship and arms manufacturing corporation are having a much harder time of it. Plenty of regular Americans that were affected by Katrina are involved in litigation with their insurers, and the Federal Government hasn’t offered any such bailouts for them.
Thousands of families and homeowners are being given absolutely nothing from their insurers, and their claims are being denied on what is called an “exclusionary clause,” which states that while damages due to wind are eligible for coverage, damages due to flood and water are not. The main debate now is whether damages were indeed caused by wind or water, and this is, of course, being hotly disputed by insurers.
A recent Newsweek article tells the story of John Hadden, a Bay St. Louis, Mississippi resident that returned home after Katrina to find that the only thing left were concrete pilings. Mr. Hadden received a letter in January of 2006, informing him that, due to the exclusionary clause, he wouldn’t be receiving a dime. Never mind that no one came to actually look at the damage to determine whether it was wind or water that caused Mr. Hadden’s house to disappear. Mr. Hadden, of course, couldn’t tell himself, because like millions of residents of that area, he was evacuated from the area when the damage took place.
State Farm’s home insurance policy is dense and utterly riddled with confusing legalese. According to the same Newsweek article, the policy contains the following loopholes:
“We do not insure any coverage for the loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arising from natural or external forces, or occurs as a result of any combination of these..”
Among the causes is flood damage, and also something called a “storm surge,” which means that, technically speaking, even though your house might have been blown away as opposed to washed away, it was a water based storm that caused the damage, so policy holders actually had their homes destroyed due to water.
The insurers were assuming that all the damage was based on floods, even without sending anyone out to the damaged areas to see for themselves. According to a report by People Over Profits, the insurance companies started calling it “The Great New Orleans Flood” while Katrina was still bashing the Gulf Coast.
Many residents of the Gulf Coast are fighting back. 669 residents have filed suit against State Farm on the grounds that they haven’t properly investigated the cause of the damage (much like Mr. Hadden, who simply received a form letter in the mail,) and Mississippi Attorney General Jim Hood also launched a suit against five major insurance companies on the grounds that they tricked Katrina victims into signing forms that claimed that it was water that damaged their homes and cars.
The insurance companies are claiming that they have settled in the majority of these cases, and that sounds great on paper. But what they don’t say is that they are settling for paltry fractions of what the homes and properties are worth, and this is after months of delays and denials and wrangling. People who have had their lives destroyed have to continue to live in desperate conditions for months while this dance goes on.
Insurers are also claiming that they couldn’t possibly afford to pay for such a catastrophic event, and that offering full value for even the wind damage would surely be the end of their businesses. But the numbers don’t seem to match this claim. Even after they factored in Katrina, insurers had a year of record profits in 2005, earning $44.8 billion.
Some insurers were able to handle their Katrina claims with no financial trouble at all. On pages six and seven of their 2005 annual report, GEICO owner Berkshire Hathaway proudly stated that GEICO was profitable enough to easily cover their $3.4 billion worth of claims. It seems that the insurers save their doom-and-gloom scenarios for the media, while telling their investors the exact opposite.
This tragedy and subsequent reprehensible behavior by the insurance companies is a sad reminder that insurance companies don’t play fair. Despite all the catchy jingles and funny commercials, the primary concern for an insurance company is profits, and in order to protect their bottom line, there are no depths to which they will not sink. They will delay, deny, offer inadequate and unfair settlements and put claims through ridiculous and overbearing scrutiny. Barbara Williams has dedicated her career to making sure that the needs of her clients won’t be discarded or ignored. An accidental injury can bring extended hospital stays, surgery, long term disability or the loss of a job. This is more than enough to worry about without being told by the insurance company that they are not responsible, when in fact they are.
If you or a loved one has been injured in an accident that wasn’t your fault, and you feel that the insurance companies are not treating you fairly, call our offices for a free case assessment today.