In last week's edition, National Underwriter ethics columnist Peter R. Kensicki reported on reader feedback to his latest challenge: What are the ethical issues raised by lawsuits over claims for wind-versus-water damage following Hurricane Katrina? I have my own thoughts on the subject, briefly outlined in this entry, but please check out the column for yourself by clicking here and then weigh in with your take on the situation.
Personally, I think while it's pretty clear that insurance does not cover flood-related damages, it's not quite so clear that such exclusions applied to all the damage being attributed to storm-surge in Mississippi. And I certainly wouldn't want to be in an Ole Miss courthouse trying to convince a jury of locals what I meant to exclude in the policy.
Read the column and feel free to post your observations and opinions. Are insurers in the clear here? Are they simply being taken advantage of by a politically-minded state attorney general? Or do they bear any of the responsibility for the confusion--and litigation--that's ensued? I look forward to hearing from you.
Comments (4)
Under the premise that the public's welfare transcends individual commercial gain, and knowing that insurance policy language is now purposely designed to be vague and thus encourage a broad range of interpretation most often favorable to the better funded party, it would be incumbent upon legislative and judicial bodies holding the public trust to weigh in favor of interpretation that diminished financial hardship to that public, and in so doing establish for future events clear language defining wind and water damage coverage with equitable pricing in line with the risks.
Posted by Edward Kalbaugh | September 20, 2006 12:23 PM
Posted on September 20, 2006 12:23
My comment somewhat reinforces what Edward Kalaugh wrote and gives it historical context.
I have been studying disasters in the past, and for each one there was some major problem about coverage or other terms. The disaster exposes the then current arrangement as needing revision.
I don't think the complaints are in any way unethical. They may be shrill, they may be way out there, but they point to imperfections in the insurance policy's design.
Posted by Peter Rousmaniere | September 20, 2006 1:53 PM
Posted on September 20, 2006 13:53
Peter's comment is right on! The insurance industry is begging for a fight when they make policy language so ambiguous that the common man is left wondering if a loss is covered or not.
The industry is missing a great sales opporutnity by not offering a simple policy that provides replacement of your residence, auto, and other tangible items for any and all sources of loss (except intentional acts, of course).
Homeowners don't really care if it was wind, water or both that left them homeless. Just cover me for the loss and pay claims in a timely manner.
Posted by Nathan Carruth | September 21, 2006 3:56 PM
Posted on September 21, 2006 15:56
I think the policy is vague if you didn't buy flood insurance, but it must have been pretty clear for the people who purchased the coverage.
I wonder if any of the above parties have ever read a standard homeowners flood exclusion. It seems very clear to me.
We have an opinion from a federal judge in Mississippi who says the policy wasn't ambigious. Also, most adjusters, claim managers and insurance carriers just want to get these claims paid and closed.
Trust me, if there's a grey area, they give it to the insured.
Posted by the claims guy | September 27, 2006 3:59 PM
Posted on September 27, 2006 15:59