Video: Insurance lawsuits

updated 9/15/2005 9:41:54 PM ET 2005-09-16T01:41:54
STORY

The state of Mississippi has filed suit against major insurance companies that are reportedly denying coverage to residents displaced by Hurricane Katrina's storm surge.

Mississippi Attorney General Jim Hood wants insurance companies to pay billions of dollars to residents who did not have flood insurance.

“When people buy insurance they're buying because it contains a hurricane provision in there, and they assume that they're covered for hurricane whatever damage it does," says Hood.  "This exclusion in the fine print says they are not covered for damage done by water.”

Approximately, three out of 10 homes in the ravaged areas of Alabama and Mississippi had flood insurance at the time of the storm.

But many residents in the effected areas realized too late their monthly insurance premiums did not protect them from flood damage.

Allstate Insurance, one of the companies named in the lawsuit, issued a statement this afternoon.  The statement reads, "The fact is flood insurance protection has been offered by the federal government for nearly four decades precisely because flood damage is not covered by private insurers like Allstate."

"What the attorney general is recognizing is that the insurance industry for this catastrophe in Mississippi is essentially saying the policies they sold are worthless," Attorney Finley Harckham says.  "On the one hand, they’re saying there’s no flood coverage.  And then they’re saying it’s incumbent upon the policyholder — whose home no longer exists — to prove that wind damage that might somehow come into play."

But Harckham, a frequent a litigator of insurance claims, says the state has a major shot at winning these cases.

“What this suit raises is the issue is whether these provisions ought to be voided because of public policy.”

Watch the 'Abrams Report' for more analysis and interviews on the top legal stories each weeknight at 6 p.m. ET on MSNBC TV.

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