Houston Trial Lawyer Blog : Houston Business Litigation Lawyer & Attorney : Arnold & Itkin Law Firm : Personal Injury, Wrongful Death, Accident Claims

A Mississippi couple is suing USAA for refusing to pay out their $1 million homeowners claim. USAA argues the family's home was damaged by water rather than wind, which is not covered in their policy.

The home of Margaret and Magruder Corban was damaged during Hurricane Katrina in 2005. Upon filing their insurance claim, they found that USAA was only willing to pay them $40,000 for wind damage and $40,000 in other coverage. The Corban's insist their home was destroyed by wind before the storm surge came through and USAA should, therefore, pay out their entire $1 million claim.

Many insurance companies maintain that their homeowners policies cover wind damage from a hurricane, but not the rising water that often comes with it. They also use overly general language like "anti-concurrent cause" to explain that damage from both wind and water are not covered by the policy.

While a Mississippi District Judge ruled this clause "ambiguous" and unenforceable in an earlier case, a New Orleans court of appeals reversed the ruling. Lawyers for USAA say the court should follow precedent and deny coverage for combined wind and water damage. The Corban's lawyer, on the other hand, says the precedent is not upheld in Mississippi due to the earlier decision and ultimate appeal outside of Mississippi.

Many insurance disputes arise from the extreme damage done to homes during hurricanes. When a home is reduced to a slab, who's to say what caused the damage, wind or water? In the Corban's case, USAA maintains the damage done to the first floor of their property was caused by water. Unfortunately, there may be no way to tell what the actual cause was for the damage.

Sidestepping Insurers

Many insurance companies use ambiguous language, technicalities, or any tactic available to free themselves from the financial responsibility they have to their policy holders. While it seems USAA may have attempted to meet the Corban's half way by paying for damage to the second story of their house, which they agree was caused by wind, the Corban's could very well deserve to be paid out for the entire house.

Aside from figuring out how to decide whether wind or water damaged a home during a hurricane, maybe insurers should be more clear in their policies about what qualifies as wind and water damage. Some insurance dispute attorneys would even argue that insurers not be allowed to specify wind damage as the only hurricane damage covered in a policy. We all know that with hurricane winds comes water, and separating the two often seems like an unfair safety net for insurers.

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Homeowners across the country and especially in the Gulf Coast region can look forward to a long and tough hurricane season. The reason? Homeowners are finding it harder to hold on to their hurricane insurance policies.  

Insurers across the U.S. are raising premiums and dropping coverage to limit their exposure to risks. As a result, homeowners are finding that insurance is not only more expensive, but also more difficult to get. According to the Insurance Information Institute, homeowner policy premiums have risen by 3 percent across the country. The increase is even greater in the Gulf Coast region where the impact of hurricanes tends to be maximized.

• Last year, state Farm Insurance Company and AllState Corp raised premiums in Texas, blaming a high number of hurricane insurance claims as the result of Gustav and Ike, for the increase.
• llinois-based AllState has also raised deductibles and stopped offering coverage in some coastal areas.
• State Farm Florida could soon pull out of the Florida market because it was denied its request for a 47 percent rate increase.
• According to the Insurance Information Institute, insurers have seen record losses in Texas, Louisiana, Mississippi, and Florida over the past five years. In these areas, premiums have risen sharply. 

The National Oceanic and Atmospheric Administration has forecast between 9 and 15 named storms in 2009, including between 4 and 7 hurricanes. Of these hurricanes, between 1 and 3 will likely be major. However, forecasters are also predicting fewer hurricanes than last year. That should be good news for homeowners in hurricane-prone areas.  

Insurers Backing out of Hurricane Coverage

Insurers are blaming devastating financial losses from powerful hurricanes over the past five years, as well as the current turmoil in the financial markets, for impacting their earnings. Companies use financial investments as an additional source of income to fall back on when they have huge claims to pay out. Most of the major insurers have reported huge losses due to a decline investment income.  

For worried homeowners it does not really matter why an insurer would back out of an agreement. With insurers getting antsy about paying claims, and large numbers of Ike lawsuits still pending in the courts, we can expect more people to need insurance attorneys once November comes and the season ends.

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In the aftermath of Hurricane Ike, power outages left small business owners at the mercy of swamped insurance companies, unsure if their much-needed claims would be approved.

On October 10th, 2008, the Houston Chronicle reported small business owners Scott Spencer, the owner of a wine shop, and Patty Larkin, the owner of Pattywhacks and Co., were still waiting to hear from their insurance companies after 4 weeks of post-hurricane stress. Spencer lost power for four days after the hurricane and $8,000 in daily sales; he has business insurance, but heard from others that "power outages aren't covered under business interruption coverage." Larkin's store was closed for 12 days costing her an estimated $10,000 in sales and after her insurance company told her the loss would not be covered and then backtracked saying it might be covered, she still awaited a final decision.

Where homeowners insurance typically provides the same coverage for everyone, business insurance is much more convoluted. In addition to finding a way to make up for lost revenue, small business owners like Spencer and Larkin had to learn the ins and outs of business insurance and how to deal with their insurance agents. Business interruption coverage protects companies in the event of a disaster or other circumstance that stops normal business, but only if the damage resulting in the halt is covered in the policy, like wind or flood, for example. Also, most small businesses don't have insurance for loss of market, which refers to a loss in revenue due to regular customers moving out of the area or to another company offering similar products or services, simply because they are open. These are only a couple of examples of the complications and nuances inherent in hurricane insurance claims.

Insurers are required to accept or deny claims within a stipulated period of time and, if they intend to deny a claim, must notify the policy holder of the reason for denying the claim. If the insurer is unable to determine whether a claim will be accepted or denied they must inform the policy holder of their need for additional time.

Hurricane Insurance Litigation

Figuring out how to approach insurance malpractice and pursuing hurricane claims against big insurance companies can be frustrating and intimidating. At Arnold & Itkin LLP, our attorneys have years of experience and expertise litigating successful insurance malpractice lawsuits against some of the biggest insurance companies in the nation.

If you or a loved one has been denied rightful claims by an insurer, contact an insurance attorney at Arnold & Itkin LLP for a free consultation.

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A couple from Jefferson County, Texas has filed a hurricane insurance claims lawsuit against insurer State Farm Lloyds. The lawsuit claims that the company failed to pay out claims after their property sustained significant damage during Hurricane Rita.

Charles and Sandra Conn's house in Beaumont, Texas suffered extensive damage including severe destruction to the structure and the foundation as Rita ripped through the Gulf Coast in September of 2005. Soon after the storm, the Conns submitted their insurance claims to State Farm Lloyds, claiming repair expenses as well as their living costs. The couple was in for a rude awakening when the insurer refused to entertain their claim, saying that the damage that their property suffered was not covered under their insurance. The Conns have now filed a lawsuit against the insurer as well as Steven Craig Stover, the adjuster who was sent by the company to adjust the claim. The lawsuit claims that the insurer engaged in unfair insurance practices, including misrepresenting the terms of the coverage. It also claims that there was a breach of contract due to State Farm Lloyds' failure to honor the promises outlined in the insurance policy sold to the Conns.

State Farm Lloyds recently received some unwanted attention when it was ranked 4th on a list of the worst insurance companies. The insurer has a particularly bad record regarding hurricane insurance claims – State Farm Lloyds went to great lengths to deny claims to families after Hurricane Katrina. In 2007, the company began a process of reevaluating the claim denials that it made after Katrina.

Filing an Insurance Lawsuit

Unfortunately, policy holders are often duped by insurance companies who promise them protection and security, then avoid paying out a claim when their clients need the money. Some of the country's biggest insurers are also its greediest corporations - maximizing profits by increasing premiums, and forcing policy holders to wait long periods of time before paying out a claim, when and if they do decide to pay it.

At Arnold & Itkin LLP, our insurance attorneys are dedicated to defending the rights of policyholders in their battle to win their rightful claims from insurance companies.

If you are facing problems receiving your rightful claims from your insurance company, contact a Houston insurance attorney at Arnold & Itkin LLP for a free evaluation of your case.

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