Mississippi Attorney General Jim Hood is calling on Congress and President Bush to allocate federal funds for homeowners whose insurance companies are refusing to pay for damage from Hurricane Katrina.
Hood asked the state's Congressional delegation to earmark $2 billion to $4 billion of the disaster relief money to supplement the loss the insurance companies refuse to pay.
Hood said the state faces a financial meltdown because of insurers wriggling out of paying homeowners' claims. He said many Gulf Coast residents are ready to salvage what little they can and walk away from their homes, leaving the insurance companies and banks to fight over the remains.
A mass exodus will likely cause the financial collapse of many banks, businesses, cities and counties on our Coast and severely damage the Mississippi economy, Hood warned.
"Our congressional delegation understands the severity of the situation on the Coast and they are going to do all they can to protect the homeowners, businesses and economy of the Coast and Mississippi," Hood said.
"I hope that President Bush will announce a retroactive flood insurance plan so that we can bring peace of mind to our fellow Mississippians so devastated by their losses. The Attorney Generals office will continue to monitor and review this issue and work to make sure the families of Mississippi, devastated by Hurricane Katrina, are treated fairly."
Last week, Hood filed a civil action against the insurance industry seeking to declare void and unenforceable certain provisions contained in property casualty insurance policies issued to Mississippi Gulf Coast residents excluding coverage from damage caused by Hurricane Katrina. He also sued several insurers.
On Sept. 16, Hood sued Allstate Property and Casualty Co., Nationwide Mutual Insurance Co., State Farm Fire and Casualty Co. and United Services Automobile Association as defendants, arguing that their flood exclusions should be voided and that they should pay flood claims.
Allstate responded tartly to the suit.
"The exclusions related to flood in our property insurance policies in Mississippi have been approved for use in that state by the state insurance department and have been in place for years," spokesperson Laura Margolis said.
"With few exceptions, insurance coverage for flooding has been the exclusive province of the federal government and has been since the 1960's. Presumably, those not covered by National Flood Insurance Program policies will be eligible for FEMA and other financial relief."
"The allegations made by the Mississippi attorney general are unfounded," Nationwide said. "Our company is absolutely not asking policyholders to acknowledge damage is flood related in order to receive a check for living expenses."
