Mississippi Couple Sues USAA for Katrina Insurance Dispute
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.
The 
TWIA is the only wind insurer for property owners in the 14 first-tier coastal counties in Texas. TWIA does not seek business, rather they are a "last resort" insurer. When no other insurer will provide windstorm coverage for property owners along the Texas coast, TWIA steps in.