The American Insurance Association (AIA) said it has received approval to file a brief with Mississippi Supreme Court in support of an insurer's interpretation of excludable flood damage stemming from Hurricane Katrina.

The argument over whether wind damage can be excluded from a homeowner's claim is being appealed to the high court before the case was fully concluded at the trial court level.

The case, Corban vs. USAA, was heard in the Circuit Court of Harrison County, Miss. It involved plaintiffs Margaret and Magruder Corban seeking recovery from their insurance company, USAA, for damage sustained to their home during the 2005 storm.

The Corbans had received their policy limits for flood coverage they had purchased but contested whether "storm surge" should be included under water damage, and whether policy exclusions for water under their homeowners policy should include damage caused by a combination of wind and water.

Circuit Court Judge Lisa Dodson sided with USAA on "important coverage issues," said Jim Whittle, assistant general counsel for the AIA. This included, according to the decision, partial summary judgment for USAA regarding the exclusion of "storm surge" based on the policy language.

However, Mr. Whittle said the case was not yet completely concluded in the trial court, although the court allowed for an appeal on the coverage decisions that were made. He called said this was not customary.

"Normally," he said, "you resolve all the issues, and then you do your appeals." Mr. Whittle noted that the court felt the coverage decisions in question warranted an early look by the appeals courts.

The case, Mr. Whittle noted, went past the intermediate appellate court and straight to the Mississippi Supreme Court, which agreed to review it. These decisions, Mr. Whittle said, were made over the last month.

The Supreme Court, he added, will address coverage questions regarding the application of water damage. "It's really focused on the contract language," he said.

When the Supreme Court makes its determination, the case will likely be remanded back to the trial court. "What happens is the case is essentially stayed in the trial court," Mr. Whittle said, "and what will be decided in the appellate court will then usually be remanded back to the trial court so that they can then proceed with the entire case based on the decisions that have been made from the appeals courts."

The AIA, along with the National Association of Mutual Insurance Companies (NAMIC) and State Farm Fire & Casualty Company, filed amicus briefs, and Mr. Whittle said AIA's filing was approved today.

Mr. Whittle said he did not know a specific date for the start of the Supreme Court proceedings.

This article originally appeared in The National Underwriter P&C. For the complete article, please click here.

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Special Reports /

Wind Vs. Water Case Goes to Miss. Supreme Court

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