Insurer groups are celebrating a recent ruling by a Mississippi federal judge strongly favorable to the position held by carriers that hurricane water damage is excluded from coverage.

The decision earlier this month by U.S. District Court Judge L.T. Senter Jr. in Gulfport, Miss., is the latest in the case brought by Elmer and Alexa Buente, who are contesting Allstate Property Casualty's rejection of their Hurricane Katrina damage claim for their home in Harrison County, Miss.

The Buentes, represented by attorney Richard Scruggs, have contended that their wind-damage policy should cover destruction caused by storm surge waters driven by hurricane gusts.

Judge Senter, in a decision rejecting the couple's request for a partial summary judgment against Allstate, found that their policy's flood exclusions are “drawn quite broadly, and they have the clear purpose of excluding damage caused by inundation from coverage.”

He also ruled that “since the water that entered and damaged the plaintiffs' home was tidal water, I find that the damage caused by this inundation is excluded from coverage under the Allstate policy.”

“The inundation that occurred during Hurricane Katrina was a flood as that term is ordinarily understood–whether that term appears in a flood insurance policy or in a homeowners insurance policy,” he added.

Judge Senter's ruling does not end the case, because there are issues as to what they were led to believe they needed in terms of coverage.

They have alleged that an employee of their agent told them that because they lived outside a flood plain, it was not necessary to buy additional coverage for flood.

This particular case was qualified for trial in federal court because the plaintiffs and defendant are domiciled in separate states, and the case involves a dispute of more than $75,000.

Insurance trade organizations have closely monitored the case and the American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America have all filed briefs supporting Allstate.

“The court clearly is putting to rest the trial bar's unfounded argument in this and other cases that 'wind-driven water' or 'storm surge' is not covered by plain-language exclusions,” said the three groups, in a joint statement.

“Fortunately for all Mississippians, this ruling upholds the integrity of contracts in the state, and is further evidence that misinformed statements by plaintiffs' attorneys regarding long-settled homeowners policy language are meaningless in a court of law.”

They added, “This and similar rulings are the essential underpinnings for a rebuilt Gulf Coast, because such decisions retain the predictability and certainty that all businesses–including insurers–rely upon when deciding where to commit resources, such as capital and jobs.”

Special Reports /

Insurers Win Big Round In Flood Case

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