Major Insurance Companies Continue To Refuse Katrina Claims
"Nine months after Katrina's record-setting storm surge destroyed some of the most desirable real estate on the Gulf Coast, the signs are a clear signal that people here are losing hope of ever being made whole again.
Private insurer losses for Katrina are estimated at $40 billion to $60 billion, making it the costliest catastrophe in U.S. history and renewing debates about the insurance industry's ability to pay for such losses.
But that discussion means little in Bay St. Louis, where hundreds of homeowners have learned that if your home is destroyed by a hurricane's storm surge, your hurricane insurance policies might be useless. The scenario serves as a sobering wake-up call for Southwest Florida homeowners who think their flood and wind policies will safeguard their investments in the event of a catastrophic storm.
Joe De Benvenutti and his wife, for example, thought they had done everything to protect their dream home: They had $250,000 in flood coverage -- the maximum allowed by the federal insurance program -- and a "total replacement value" hurricane policy through State Farm.
The flood program paid out.
But State Farm has refused to pay on the grounds that Katrina's 30-foot storm surge -- not its 140 mph winds -- wiped out their home and the damage isn't covered by their policy. With a home valued at nearly $700,000, the flood payout doesn't come close to replacing all the Benvenuttis lost."
Read the full article in Florida's Herald Tribune here.