Allstate Loses First Katrina Case
Allstate now knows State Farm's pain: according to an article in the Washington Post, Allstate has lost a $2.8 million decision in the case of Robert and Merryl Weiss. I've been following this case, and if Allstate lost this one (where it had some arguments in its favour), it doesn't bode well for other cases yet to come to court.
This really should get the attention of insurers, regarding the denial of claims made in the aftermath of Katrina. Most of the Weiss settlement was penalties and damages assessed because Allstate didn't pay the Weiss's claims quickly enough. The jury was obviously sending a message to insurers in general. Of course, Allstate will appeal the decision, and will do its best to get the settlement decreased -- but still, the message has been sent.
This conviction is very good news for hundreds of homeowners that are waiting for their cases to be heard. However, it could be bad news for the insurance business in Louisiana. Big insurers like State Farm and Allstate have already been making noises about withdrawing from the state completely. State Farm has already stopped writing new policies in Mississippi. The same outcome could be in the cards for Louisiana. This may leave only less financially-stable insurance companies, or companies that don't write hurricane insurance coverage at all.
The withdrawal of insurers could be a challenge for people living in the state. In the aftermath of Katrina, we've seen how important it is to have coverage in case of severe weather.
You can expect that insurers will make their policy language even more specific, given that the Katrina cases are going against insurers. For those living in these areas, you'll likely need to have a policy for wind, hurricane, tornado, flood and other water damage in order to be fully covered in the case of severe weather.
Monique L. Attinger