After Katrina struck Southern U.S., many people were left devastated, with no housing or resources. For some people, the insurance companies have denied claims based on flood-damage exclusions.
This denial of claims is based on loose and misleading terminology. With standard homeowner’s insurance, wind damage is covered along with water damage that comes as a result of wind, such as rain damaging floorboards because strong winds broke a window. Flooding, such as occurred with many residents living in gulf states during Katrina, is not covered by these policies. If a house has wind damage insurance companies will cover what is above the water line, and houses that have been totally annihilated, or vanished, are placed under flood damage and go completely uncovered. If a homeowner had purchased federal flood insurance, their house would be covered in such cases, but most citizens had assumed that water damages due to floods from hurricanes would be covered.
The disastrous storm cost insurers about $50 billion – although the number sounds high, it proves incredibly insufficient when facing damages in the $75 billions. Americans for Insurance Reform wrote a report condemning the actions of the two biggest home insurers in the U.S., State Farm Mutual Automobile Insurance Co. and Allstate Corp. These two companies, along with three others, were filed against in a lawsuit in September, as well.
Much of the information for this article was provided by MSNBC, where you can read up on tips to keeping yourself insurance-safe in gulf states!
