Litigation for Hurricane Katrina and Insurance Policy Language
Closing arguments have been heard for the first of many cases that will work their way through the US courts, concerning unpaid insurance claims after the 2005 hurricane season. In many cases coming before the courts, insurers are refusing to cover damage from Katrina's "storm surge" because of the way policies were written.
It will be interesting to hear the outcome.
Language is vitally important in insurance coverage. Each and every word is measured and weighed by your insurer before its included in your policy. Now these words will form the basis of court cases, and will ultimately determine whether people will get money for storm-damage or not.
This is a very tricky area. How can you, as the person buying a policy, be sure the language of the policy won't exclude you from getting paid for a claim?
Your best bet is to be as careful and cautious over the wording of your policy as your insurer has been. Unfortunately, when things go wrong in a legal relationship -- such as the one you have with your insurer -- the wording of the contract will determine the outcome. As a result, the wording requires much more review than most of us ever consider.
Something for all of us to be aware of: most insurers are now separating "storm surge" damage from other kinds of damage. If you have coverage for flood, be sure that "storm surge" is also included. If it's not explicitly included, you could be in trouble later, so check with your insurer now, and get something in writing! Do not take the word of a customer service rep over the phone; the most important thing if you end up in difficulties with your insurer is written documentation.
If you really want the right kind of professional to review your policy, consider having a lawyer review it. A lawyer can spot right away where "contract" language is biased in favour of one party or another. While it may seem over the top to have a lawyer review our insurance policy, if you have any concerns over your coverage, it could be a good investment. The knowledge you gain will help when you negotiate the next insurance policy, in addition to the current one.
Which policies should you be most concerned about? Your homeowners policy is the biggest one. Second would be your auto insurance. These are types of insurance where there could be real contention in the claims process.