Allstate Faces First Katrina Lawsuit
We've already seen State Farm face the fire after allegations of abuse in its settlement of Katrina claims; now, it's Allstate's turn.
According to an article on MarketWatch.com, the first of the Allstate "slab" cases is being heard in court. The so-called slab cases refer to homes that were so completely destroyed that nothing remains except the concrete slab on which the house was built. The slabs reveal very little about how the house met its end, and so the problem is: how was the house damaged? In this case, the homeowners and Allstate have disagreed over whether to assign damage to wind, which is covered by hurricane insurance, or flood, which is not.
Similar cases against State Farm have been resolved in favour of the claimants. However, Allstate is arguing that it acted differently than State Farm and that the outcome of the cases should not be assumed. In fact, Thomas Wilson, Allstate's president and chief executive, said that Allstate did its best to determine the real cause of damage as opposed to State Farm, which simply denied claims upfront without further checking evidence.
This first case is a complex one. The claimants, Merryl D. and Robert Weiss, had a home that was situated between a lake and a bayou on a very narrow peninsula. In addition, the Weiss's have actually accepted flood insurance money. Part of Allstate's argument is that, in accepting money from NFIP, the Weiss's have declared that flood destroyed their home; anything else is "double dipping". However, Allstate also paid the total claim for the Weiss's neighbour's home, and yet found that the cause of the destruction of the Weiss's home was different than the neighbour's.
This will make some interesting watching as the case unfolds. It may also remind people that they have to check their coverage carefully; don't assume you have coverage for flood if you have hurricane insurance.
Monique L. Attinger