Hood, Caldwell: Buyers beware after hurricane

John O'Brien Sep. 2, 2008, 3:11pm



JACKSON, Miss. (Legal Newsline) - After his first major hurricane as Mississippi's Attorney General, Jim Hood quickly filed suit against five insurance companies.

Three years and a mess of Hurricane Katrina litigation later, Hood is again warning consumers in the wake of this weekend's Hurricane Gustav. This time, though, he's set his sights on price-gougers.

"In a state of emergency, businesses cannot increase their profit margins and they may raise their prices only to cover increased costs," Hood said Sunday. "They must be able to justify that any rise in price is a direct result of increased cost in providing the product to the public."

Louisiana Attorney General Buddy Caldwell has similar concerns. He even had investigators collecting information on pre-storm prices.

"Businesses have been very cooperative, welcome our involvement and are helping us police competitors," Caldwell said.

Hood warned specifically against home repair frauds, advising consumers to get contracts in writing, find two estimates, ask for references, view permits and not give contractors money up front, among other things.his attack on the company

After Katrina, State Farm Insurance Cos. paid to fix Hood's roof in Jackson. That, obviously, didn't stop Hood from suing State Farm and four other insurance companies weeks after Katrina, claiming that they intentionally misrepresented to policyholders the amount of damage done by wind (covered by their policies) and water (covered by a federal program).

A proposed settlement with State Farm had the potential to affect more than 35,000 policyholders, but a federal judge did not approve of it for procedural reasons. A separate successful settlement of 640 claims was coupled with a $5 million payment to Hood with the agreement his criminal investigation would cease, the company says.

Hood eventually sued State Farm again for not making the rejected settlement work. State Farm claims he threatened it with the prospect of another criminal investigation.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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