Mississippi Attorney General Jim Hood won a small battle last month when the U.S. District Court granted a motion to remand to state court the lawsuits against several insurers regarding coverage for damage resulting from Hurricane Katrina. The lawsuit seeks to make the insurance industry pay for losses caused by Katrina, particularly damage caused directly or indirectly by water, whether or not driven by wind.

Defendants in the case, which includes State Farm, Allstate, Mississippi Farm Bureau, Nationwide, and United Services Automobile Association, sought to remove the action to federal court after it was initially filed in state court. They contended that the lawsuit raised substantial federal legal issues.

The court disagreed, although it acknowledged in its response that defendants had identified a “federal interest in the subject matter and outcome of this suit.”

Industry representatives voiced their disapproval of the decision.

“The National Association of Mutual Insurance Companies believes that the court has not given adequate consideration to the arguments of the defendant insurers in this case, particularly the impact of this case on the uniformity of federal flood insurance plan coverages in states susceptible to hurricanes and their resulting damage,” said David Reddick, senior state affairs manager for NAMIC.

“We believe that we and the other insurer defendants were correct in the decision to remove this case to federal court,” said Fraser Engerman, spokesperson for State Farm. “Regardless of what court eventually hears this case, we will vigorously defend the language and intent of the contracts we have made with our customers.”

“We still contend that it has been well known for over a half century that flooding is not covered under most homeowners' insurance policies,” said Mike Siemienas, spokesperson for Allstate. “Exclusions contained in Allstate's property policies clearly state that flooding is not covered and applicability of such exclusions is a matter of well-settled law in Mississippi and elsewhere.”

Attorney General Hood had his own opinion on the matter.

“As I stated when the insurance companies moved this to federal court, their attempts were nothing but a tactic,” said Hood. “The insurance industry is using [these] delays in hopes that many Mississippians will give up on their claims and take whatever the insurance companies offer. I hope people will hold on just a little bit longer and let us get a decision on this case.”

The victory likely will expedite the process, although a state hearing had yet to be scheduled at press time.

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Mississippi Flood Lawsuit Stays Local

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