Judge Rules for Insurance Company in Hurricane Flood Damage Case

By LAURENCE VIELE DAVIDSON
August 16, 2006

ATLANTA - A judge in Mississippi ruled in favor of Nationwide Mutual Insurance Co.in the first trial of hundreds of insurance lawsuits over damage by Hurricane Katrina.

U.S. District Judge L.T. Senter in Gulfport, Miss., yesterday rejected the claim by Paul and Julie Leonard that the insurer owed them about $150,000 for damage by wind-driven "storm surge." Judge Senter upheld the company, saying storm surge was part of a water-damage exclusion in their homeowners policy.

The decision after a non-jury trial last month may signal how similar suits against insurers including State Farm Mutual Automobile Insurance Co. and Allstate Corp. will be resolved. Judge Senter will preside over most federal Katrina cases.

"If I were an insurance company, I would be cautiously optimistic," Matt Steffy of the Mississippi College School of Law said. "First and foremost, insurance companies had to establish that their policy language excluded this. And that sounds like what happened here. This is clearly cause for insurance companies to take a sigh of relief."

An American Insurance Association official called the verdict "a significant step forward for insurers and others committed to rebuilding after Katrina," which devastated New Orleans and caused widespread damage in Mississippi last summer.

The decision "validates the sanctity not only of insurance contracts in Mississippi, but all legal contracts in the state," a vice president of the industry group, Cecil Pearce, said.