Mississippi Attorney General Jim Hood sounded as confused as most observers when he tried to explain to a House subcommittee how State Farm Insurance Co. is applying its policies to homeowners claims after Hurricane Katrina, an insurance attorney said Thursday.
Hood testified Wednesday before a House Committee on Financial Services subcommittee that is investigating the insurance industry's post-Katrina practices, and David Rossmiller, a partner at Dunn Carney in Portland, Ore., who watched the testimony and has been analyzing the Gulf Coast's insurance situation for Legal NewsLine, said Hood made a few mistakes.
Rossmiller said Hood, who filed a lawsuit against five insurance companies for allegedly not honoring its homeowners policies a few weeks after Katrina, made statements that "kind of assume facts not in evidence."
"I gather that Mr. Hood is a very experienced lawyer and quite a bit on the ball if he's an elected official, one of the highest elected officials in the state," Rossmiller added. "You'd think he'd be able to read the policy and figure it out, but you can't quite account for the discrepancy between what actually happened and what he's saying."
Specifically, Rossmiller said Hood got mixed up on State Farm's anti-concurrent clause on its homeowners policies.
The clause essentially states that if events occur in sequence (i.e. covered wind damage followed by uncovered flood damage), then the uncovered damage will not become covered.
Hood, Rossmiller said, has twisted that to mean State Farm will not cover wind damage where there is a presence of flood damage.
"Wind damage will always be covered," Rossmiller said. "(State Farm's) position is not that if they had, say, 90 percent of a house destroyed by wind then a flood came along and destroyed the house anyway, (there would be no payment at all).
"What Hood is suggesting is the position of State Farm is that they wouldn't have to pay 90 percent of the wind damage. But that is not the way it is when you read the anti-concurrent language, and it is not the way State Farm is interpreting it.
"He's trying to put words in State Farm's mouth."
An excerpt from one of State Farm's policies can be found here, in an order denying State Farm's motion to dismiss in the case of John and Claire Tuepker.
Hood also claimed that insurance companies have put a burden on taxpayers because the National Flood Insurance Program, funded by taxpayers, sold by insurance companies and backed by the federal government, had to completely pay off homes with flood insurance, Rossmiller said.
Rossmiller added that the most flood insurance a homeowner can purchase is $250,000 for the structure and $100,000 in content, so homes worth more than that were shortchanged anyway.
Hood said insurance companies owe money to the flood insurance program, leaving Rossmiller, whose blog can be found here, to wonder how the insurance companies were all of a sudden responsible for both wind and water damage in Hood's eyes.
"There seems to be an incredible stretch of imagination," Rossmiller said. "There's something wrong with that. When the evidence says a home is destroyed by a flood, then there should be a payment by the flood insurance program.
"That's one argument that I don't feel is valid at all."