The Attorney General for the State of Mississippi filed action against named and unnamed insurers over policies containing exclusions for water damage, whether or not driven by wind, in Hood v. Mississippi Farm Bur. Ins., Civil Action No. G2005-1642R11, (Chancery Court of Hinds County, MS, Sept. 15, 2005).
The complaint, filed in the aftermath of Hurricane Katrina, names the following insurers as defendants: Mississippi Farm Bureau Insurance; State Farm Fire and Casualty; Allstate Property and Casualty; United Services Automobile Association; and Nationwide Mutual. Jim Hood, the Attorney General, also listed “A” Through “Z” Entities as defendants—business entities “whose identities are presently unknown.”
The State alleges that defendants issued insurance policies to Mississippi Gulf Coast residents and property owners “purporting to insure against property loss and damage from wind storms and hurricanes, but which contain substantially similar provisions attempting to exclude coverage for hurricane loss and damage if the loss and/or damage included, directly or indirectly, loss or damage resulting from water, whether or not driven by wind.”
In the complaint's first count, the State says that the policy exclusions violate Mississippi public policy. The complaint states that the exclusionary language contradicts Mississippi's “law and judicial precedents governing the issue of proximate causation,” and Mississippi common law, “which mandates that full coverage be provided if the proximate and efficient cause of the damage (i.e., hurricane wind) is covered under the subject policy, even if other 'non' covered causes also contributed to the loss.”
Count Two of the complaint purports that, since the policies were contracts of adhesion, they “deprived the policyholders of meaningful choice of coverage.” Thus, the State alleges that the policies favor the defendants and oppress the policyholders and that the exclusionary provisions should be declared unconscionable and void.
The third count asserts that the water damage and flood exclusions are ambiguous and “expressly contradict other policy provisions in these policies which provide full coverage for all damage proximately caused by Hurricane Katrina.” Such ambiguity, the State says, is to be construed in favor of the insureds.
In Count Four, the State alleges that defendants violate the Mississippi Consumer Protection Act by selling “these policies that specifically contemplate full and comprehensive hurricane coverage, but seek to exclude coverage.”
The fifth and final count states that insureds “are suffering and will continue to suffer immediate and irreparable harm unless injunctive relief is granted.” The State alleges that “Defendants are utilizing these exclusion provisions as grounds to deny and/or substantially reduce their coverage that they otherwise should pay.” Further, the State asserts that defendants are forcing their insureds to accept reduced payments.
Hood is seeking a temporary restraining order, as well as a preliminary and permanent injunction, to keep defendants and anyone acting on their behalf, including independent adjusters, from “attempting to have their policyholders acknowledge that their damages are the result of 'water damage' and/or 'flood damage' in connection with a partial adjustment of any and/or all claims arising out of damage from Hurricane Katrina;” “utilizing any policy exclusions subject to this action;” and “utilizing such policy exclusions to compel, require, encourage or otherwise induce policyholders making claims on their policies into accepting less than the full coverage provided.”