Mississippi attorney Richard F. Scruggs, long the bane of the cigarette industry, filed suit against Nationwide Mutual Insurance Company on the part of a homeowner who was denied a claim by the insurer.
The lawsuit was filed in Mississippi Chancery Court of Jackson County on behalf of Paul and Julie Leonard, residents of Pascagoula, Miss.
According to a statement from the law firm, the Leonard's were denied coverage under their homeowners insurance for damage they sustained to their home during Hurricane Katrina. The Leonard's contend that denial of coverage was issued by their insurer, Nationwide, without inspection of the damage.
Mr. Scruggs, who gained notoriety in fighting the tobacco industry, last month called on the state attorney general to look into homeowners policies covering losses from flood damage caused by Hurricane Katrina.
He contends that flood damage, as the result of a hurricane, should be covered despite the clear flood exclusions written into the policies. Subsequently, Mississippi Attorney General Jim Hood said he would investigate the contracts as a matter of public policy to determine if insurers should cover flood damage caused by a hurricane.
Flood damage is excluded in homeowners insurance policies. The coverage is, however, available through the National Flood Insurance Program. As few as 10 percent of homeowners in Mississippi have flood insurance.
In response, Columbus, Ohio-based Nationwide said it has not reviewed the lawsuit. The carrier was critical of reported attempts by the attorney to "throw out well-established flood exclusions."
The company said that, "If these long recognized and relied upon exclusions were to be deemed null and void, it would have a significant negative impact on insurance policyholders across the country."
It also said it would investigate each claim before reaching a decision.
In a statement on the suit, Mr. Scruggs did not say why the policyholder's claim was refused, except that there was no inspection.
Mr. Scruggs was not available for comment.
A spokesman for Nationwide said the company is continuing to evaluate the suit. He also said the company is going through a very thorough process before claims are denied.
On Sept. 7, Mississippi Commissioner of Insurance George Dale instructed all companies that they must fully inspect any damage to property before a coverage decision is made. He said he had no doubt that when there were questions about coverage, the decision would be made in the policyholders' favor.
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