Like after 9/11, insurers are considering limiting payout to Katrina victims only for damage caused by wind and rain during the storm. They would exclude coverage for the flooding that occurred after the storm passed.
AP Insurers are potentially facing billions of dollars in losses from Hurricane Katrina claims, and battle lines have begun forming as carriers argue they aren't responsible for flooding excluded from standard homeowners policies.
The majority of homes in areas slammed by the hurricane have policies that cover wind and rain damage, but relatively few had extra insurance to cover flooding. Insurers are posturing to limit the amount of damages by saying massive flooding in storm-ravaged New Orleans is a separate event from the hurricane itself.
The insurance carriers goal is to limit their financial burden by claiming that the catastrophe was two separate events.
This distinction could save insurers billions of dollars more from a catastrophe billed as the costliest natural disaster ever to face the industry. Some carriers have even adopted the phrase "The Great New Orleans Flood" in an effort to make that distinction more tangible.
"If there is a question at some point as to whether the industry should be held responsible for flood insurance, that would change the whole mechanism of how insurance works," said Loretta Worters, a vice president with the Insurance Information Institute, a trade organization sponsored by the property & casualty industry.
Well at least their hearts are in the right place. Well up to a point.
"I understand their plight, and insurers have their adjustors out and see what's going on, but we are compassionate up to the point of the policy," she said, "but, that's where FEMA has to step in."
FEMA is going to step in?
FEMA already screwed the people of the Gulf Coast, and now they will have to battle the insurance companies while their trying to rebuild their lives. If they lose they'll have to rely on the same agency that let them down before and after Katrina hit.
UPDATE: Some of you are arguing that the insurance companies are correct. I can see your point. What I'm left wondering is, what is FEMA's track record in dealing with this type of situation? Can we expect that those who lost their homes to the flooding will get adequate support?