What Part of a Contract Do People Not Understand?

[jyl]

I used to be a lawyer, and did a lot of insurance coverage work, although almost always on the defense (insurance company) side.

The lawsuit referred to in the first post isn't really a moral issue, IMO. The parties to a contract have every right to fight for every bit of advantage they can get under the terms of the contract. Corporations do this all the time.

This particular contract was written by the insurance company and its lawyers. They had every opportunity to make it crystal-clear that a wind-driven storm surge is excluded. If they failed to do so, they're exposed to loss.

The legal context is that if a loss is caused by two forces simultaneously, one covered and one excluded, then the loss is covered i.e. insured. So if a house is destroyed by a combination of wind (arguably covered) and of flood (arguably excluded), there's a decent argument that the loss is covered. Now, its been a long time since I've done insurance law (or any law) so that might not be completely right, but it is roughly right. Given that legal context, and the well-known reality of what happens in a hurricane zone, the insurance company and its lawyers had every reason to take great care in drafting the contract.

Bottom-line, I'm not inclined to condemn the plaintiffs here as scumbags. They think they've got a decent legal argument, and they have the right to test it in court.

The bigger picture, to me, is with the way the courts resolve these disputes. I have a lot of problems with the cost and fairness of the litigation process. But a ruined homeowner in LA or MI can't do anything about that.

[Burnin' oil]

Legion,

Isn't State Farm's H.Q. in Bloomington? Do you work for S.F.?

[Shaun @ Tru6]

Originally posted by RallyJon
What makes this lawsuit even more shocking is that Trent Lott is/was a hard core right wing Republican. I guess that, corrollary to the old saying that a Republican is a Democrat who's been mugged, a plaintiff can be a former anti-trial lawyer Republican who's been tort(ed).

Jon, I think it's just another example of the mindset of politicians, republican and democratic alike.

[wilke3169]

I live in a hurricane prone area. I luckily am not in an area threatened by flooding and still my house is 10' off the ground. (Bonus garage space I am insured by SF. I do believe I should feel guilty for all of the trees that were killed to print the papers informing me that I will not be covered by any water damage. Not only is it in the policy it is covered over and over again by the company and the agent. I would Be willing to bet these same mailings were sent to all of those affected by this water damage and will likely be used in court.

Rally Jon stated: Flood insurance may be obvious--even to an idiot. But what if the insured literally can't understand the document? (we are talking about MS, LA and AL here). Is the assumption that all southerners are idiots? I guess some people don't get out much.

[RallyJon]

The legal context is that if a loss is caused by two forces simultaneously, one covered and one excluded, then the loss is covered i.e. insured.

Really? Interesting. I wonder if that's state by state or nationally.

[legion]

Originally posted by Burnin' oil
Legion,

Isn't State Farm's H.Q. in Bloomington? Do you work for S.F.?

There are two insurers based here in Bloomington: State Farm and Country Companies. There is also a Illinois State University and a Mitsubishi factory (where they make the Eclipse). There are also numerous sattellite offices of major tech companies here in town to service the needs of the big four employers listed above.

I'm in IT, but because of the litigious nature of the industry I work in, I prefer not make it widely known who I work for. That being said, the opinions stated here on Pelican (and everywhere I state opinions--do I have specifically create an inclusive list of each place?) are my opinions, and not those of my employer. I do not represent, in any way, shape, or form the opinions of my employer and am not authorized to speak on its behalf.

[gaijindabe]

The argument here is not two forces simultaneously - that would be a one-two punch of flood and wind. To quote the article:

"The issue is whether a wind-driven storm surge is the same as flooding.
The companies contend they shouldn't have to pay for water damage for those who did not have flood policies."

Somehow in this bizzaro world water driven inland by a hurricane i.e. "wind" - is not a "flood". And all you need is a jury full of knuckeheads looking for free money...

[Nathans_Dad]

Originally posted by pbs911
Assuming makes you an @ss, and so do your posts. Trying to discuss anything with someone who bases the merits on spelling and grammer is futile. End of discussion.

Wow, that was really witty. I would hate to be cross examined by the likes of you!!

Your position is very interesting considering that you make a living dealing with technicalities and details. Wonder how things would go with the judge if you filed a lawsoot??

[RallyJon]

And all you need is a jury full of knuckeheads looking for free money...

Which is why noble, justice-seeking, society-benefiting trial lawyers jurisdiction shop for the deep south.

[legion]

Originally posted by RallyJon
Which is why noble, justice-seeking, society-benefiting trial lawyers jurisdiction shop for the deep south.

And Madison County, IL, up until a few months ago.

Did everyone miss that Trent Lott's brother in law is Dickie Scruggs? Mississippi has a long tradition crooked politicians--no matter the party (kinda like IL). It seems to me that Trent is trying to bring credibility to his bro-in-law's suit by joining it.

My prediction: Scruggs will win this one. It will be appealed, and as long as the case stays in Mississippi, it will be upheld. Scruggs know what court to try this in, and also knows the appeals path well. This will only be overturned if it makes it to federal court. Second prediction: after losing, all national insurers will pull out of Mississippi.

[RickM]

Originally posted by legion
Second prediction: after losing, all national insurers will pull out of Mississippi.

If the state allows them to.

Also, isn't ALL flood insurance underwritten by the US goverment?

I'll also guess SF will be fighting on behalf of the many reinsurers that actually hold these policys. There's probably less exposure to SF than most people think.

[competentone]

Originally posted by gaijindabe
To quote the article:
"The issue is whether a wind-driven storm surge is the same as flooding."

Perhaps, in the definitions for the policy, there will need to be a very legalese written definition on what "flood" and "flooding" means (if there isn't already one).

[Superman]

A hurricane is a wind phenomenon.

Those of you who like to think this suit is frivolous and that insurance companies and other corporations should not be hampered in their quest for earnings, I've got a question.

If your home was insured against wind damage but not against collision with a vehicle......and let's say there was a tornado. The tornado picked up your motorhome and tossed it into your house, destroying both. Would you consider suing if your insurance company denied the claim? The motorhome crash would have been incidental to the real cause of the damage, the tornado. Just like flooding is incidental to a hurricane.

[legion]

Reinsurance is a little beyond my limited knowledge, but I suspect the reinsurers have zero risk here. Those contracts (like the actual policies) are very clear. There might even be a clause protecting them from retroactive reinterpretation of the law.

[legion]

So Supe, what you are essentially saying is that insurance should cover everything, because you think it should? Actual policy language be damned!

I hope the next time you are hired to do something, someone creatively reinterprets your contract to include much, much more.

[competentone]

Originally posted by Superman
A hurricane is a wind phenomenon.

But the storm surge is not caused by the "wind." It is caused by the low pressure of the storm, so water damage from the flooding caused by the storm surge is not wind damage.

The storm surge (and damage from it) can be made worse by the wind, but that is true about wind in any flooding situation. If flooding was not covered by the insurance policy, the fact that the flooding was made worse by the wind is pretty meaningless.

[Nathans_Dad]

To me, flooding=flooding. I don't care if the water came in the form of rain, or a river overflowing its banks or a storm surge. If your house is under water, that is flooding, not wind damage.

[competentone]

Originally posted by Superman
If your home was insured against wind damage but not against collision with a vehicle......and let's say there was a tornado. The tornado picked up your motorhome and tossed it into your house, destroying both. Would you consider suing if your insurance company denied the claim? The motorhome crash would have been incidental to the real cause of the damage, the tornado. Just like flooding is incidental to a hurricane.

Not a proper analogy since your description does not meet the definition of "collision." The wind blowing a vehicle into a building is not the same (from a legal standpoint) as a vehicle collision with a building.

[RallyJon]

Actual policy language be damned!

I thought we established that the "actual policy language" was written by experts to protect their interests, that altering the "actual policy language" was pretty much impossible and that often the "actual policy language" was beyond the understanding of or misled the insured?

I would think that a good lawyer would argue that the above combination of factors would go against the insurance companies. I'm no lawyer, but isn't there quite a bit of weight given to what a reasonable person (i.e. a poor, uneducated Alabama jury member) would expect, given the wording of the contract?

legion, if the plaintiffs can make a case that the wording was deceptive or confusing, the insurance companies should be worried.

[Nathans_Dad]

Didn't someone post above that it is clearly stated in their homeowner's insurance policy that flood damage is NOT covered? What is so cryptic about that? Do you want a big neon sign or something??