Insurance Coverage Blog

You know the old saying -- if you can't stand the heat, stay out of the trailer. This story by Dan Margolies in today's Kansas City Star features angry denunciations by Chip Robertson and Todd Graves, suspected Trailer Lawyers, of State Farm:

“There’s a reason people call them ‘Snake Farm,’ ” Robertson said Monday.

OK, before we proceed, let's say something about this "Snake Farm" line.  As an insult, it's so-so, it's been said before, but I think the intent was for something more, a good satirical catch phrase to coalesce the storyline.  While I can appreciate the effort, this violates the first rule of satire -- it has to be funny. Like "Trailer Lawyers" is funny and catchy, it's fun to say, it's funny to think about a bunch of lawyers crammed into a trailer, probably the first trailer they've ever been in their lives ("try not to touch anything, you might catch something!").  The phrase is more than words, it gives you an image.  But "Snake Farm" is not funny, whether you agree with it or not.  It just sounds kind of unattractively bitter, like Great-Grandpa sittin' around complain' about how the milk wagon don't come no more, and them dang kids next door are so loud I can't watch my programs!!  

Let's take a look at a further excerpt from the story (I've added the words in brackets throughout this post for clarity in light of the Robertson statement): 

Although Graves and Robertson were not part of the Scruggs Katrina Group, State [Snake] Farm wants them off the whistleblower case. The insurer charges they were at meetings during which its computer data were illegally accessed.

That accusation met with angry denunciations this week by Graves and Robertson, who emphatically denied they had any role — as participants or observers — in the matter.

“They’re trying to cast these aspersions on us by saying that on March 11 (2006) we were with these girls in a trailer and got on the State [Snake] Farm Web site and viewed stuff,” Graves said. “The depositions State [Snake] Farm cites don’t say that.”

Graves acknowledged the Rigsbys might have given some of the downloaded information to Tony DeWitt, Robertson’s partner. But that, he said, “was not an ethical violation.”

“You’re not supposed to be able to go in court and just throw things up there,” Graves said. “Maybe in the blog world you can, but that’s not how you’re supposed to plead cases.”

Let's look at the Graves quote in the third paragraph of the excerpt. What do the depositions say?

Well, both Cori and Kerri Rigsby said, in their November 19 and November 20 depositions, that there were two trailer meetings.  Here's a link to a post with all the Rigsby depositions I have so you can do your own detective work, if you care to.

We know that State, sorry, Snake Farm was able, through a simple check of who accessed their server and when, to determine Cori Rigsby accessed the Sta-, Snake Farm claims records in virtually the same order they appeared on a list of Scruggs plaintiffs -- and in the January 2008 deposition she admitted she had such a list, although she said she didn't remember where she got it. This check of computer records has previously been submitted as evidence in the McIntosh case.

We also know that Cori Rigsby, on November 19, testified as follows:

Q. And when did you give Tony DeWitt your laptop? 
A. In April. 
Q. Did you also give him your password? 
A. I don't remember. 
Q. Well, it wouldn't do much good to have the laptop without the password, would it? 
A. Well, I was sitting right next to him. 
Q. All right. Did you boot it up for him? 
A. I don't remember. 
Q. What were you searching for? 
A. I'm not -- I'm not sure of the exact -- that we had a list. There were some documents that we were talking about. We were talking -- I'm not sure which documents he retrieved. I let  him in the computer, and I can't speak after that. 
Q. Where did this take place? 
A. It took place in Pascagoula. 
Q. Did you print documents as a result of that search? 
A. No, sir. 
Q. Did he read documents off your computer? 
A. I'm assuming he did. 
Q. Can you give me the date of this incident? 
A. I believe that this occurred in March. 
Q. March of '06? 
A. Yes, sir. 
Q. Can you be more specific by day? 
A. I can't. 
Q. Would your calendar refresh your  recollection? 
A. If I wrote it on there, it would have. 
Q. Do you know whether you did? 
A. I don't know. 
Q. Didn't you normally write appointments with your lawyers on your calendars? 
A. I normally did. 
Q. Did you -- is that a yes? 
A. Yes. 
Q. Did you go to his office? 
A. No. 
Q. He came to you? 
A. Yes. 
Q. He came to your house? 
A. No. We met in a trailer. 
Q. Pardon me? 
A. We met at a trailer. 
Q. Okay. Who else was there? 
A. Tony DeWitt. There were two meetings in this trailer, and I'm going to get confused as to  who was at which meeting. 
Q. Well, do your best. 
A. Okay. Tony DeWitt, Dick Scruggs, Zach 
Scruggs, Mary Winters, Chip -- 
Q. Chip who? 
A. I don't remember Chip's last name. Kerri, myself and my mother. 

* * * * *

Q. Once you logged in -- I assume you're following your counsel's instruction? 
A. Yes.

OK, this is Cori Rigsby's own testimony.  The date of the testimony, once again, is November 19, 2007. A fair inference from this testimony is that there were two trailer meetings, because that is what she said.  And at least at one of them, "Chip" and Mary Winters were present.  Coincidentally, Chip Robertson and Mary Winters, along with Tony DeWitt, are the names of the lawyers representing the Rigsbys in the False Claims Act "whistleblower" case, and Robertson is also of course the champion of the phrase "Snake Farm." A fair inference is that she gave her laptop to DeWitt in April, possibly at the second of the trailer meetings, perhaps at some other location.  But for sure at some point and at some place in April, she said, she did give the laptop itself to DeWitt.  She also testified that DeWitt was sitting right next to her at some point while she was accessing the computer, and at this meeting he might have viewed documents rather than accessing the computer itself, but it might also be that she "let him in the computer" and then doesn't know what he did.  This is not definitive one way or the other whether the computer was logged in to the server at that time.  It appears she said this occurred in March. 

Here is Kerri's testimony from the next day:

Q. And who did you meet with at the trailer? 
A. We met with several attorneys at that trailer. 
Q. Give me their names, please. 
A. Tony Dewitt, there was an attorney named Mary, Todd, and Chip. 
Q. Mary's last name? 
A. I don't recall her last name. 
Q. Is she an attorney? 
A. She is an attorney. She works with Tony Dewitt. 
Q. Does Tony Dewitt have a law firm name? 
A. It does, but I don't know what the name is. 
Q. How about Todd, is he an attorney? 
A. He's an attorney, but I don't believe he's in the same office. 
Q. Do you know what firm he's with? 
A. I don't. 
Q. And Chip, does he have a last name? 
A. He does, but I don't recall his last name. 
Q. Is he a lawyer? 
A. He's a lawyer. I believe he's the head of that firm that Tony works with.

* * * * *

Q. Well, my question is: Was there a situation that occurred on March 11, 2006, when you and your sister both accessed the McIntosh file through a State [Snake] Farm computer? 
A. It's possible, yes. 
Q. I don't want possibility. Is that likely to have occurred? 
A. Likely, yes.

Now, Kerri's testimony continued that day, November 20, 2007, as follows:

Q. Okay. Thank you. You talked earlier about a meeting that occurred on March 11th, 2006 in a trailer. And you listed several folks that were there, all attorneys except for your sister, I believe, and your mother -- 
A. Correct. 
Q. -- at that meeting. At that meeting -- 
MR. TAYLOR: I just want to be clear about one thing, Mrs. Lipsey. She has testified that there was a meeting. She did not provide the date. The date was provided by records from State [Snake] Farm's computers. 
MS. LIPSEY: Right. That's correct. That's correct. 
Q. But let's talk about -- you do remember that there was a meeting in spring, early spring, I guess, of 2006? 
A. Yes. 
Q. And at that meeting the attorneys that you listed earlier were present along with your  mother and your sister? 
A. Yes.

So from this we can see that Kerri Rigsby's belief was that the lawyers she named, Chip, Mary, Todd, Tony, were at the earlier of the trailer meetings, the one that occurred in March.  It's possible she was mistaken, of course. But that is the inference one must draw from her testimony.

What does this not tell us? It does not tell us who Trailer Todd was.  We know Todd Graves is one of the lawyers with his name on the lawsuit, but Trailer Todd might very well have been someone else named Todd. It does not tell us who looked at the computer while it was logged on to State Farm, excuse me, Snake Farm computers.  We know Cori Rigsby did, and Kerri Rigsby said it is likely she did as well.  Beyond that, the testimony is not complete. 

My question: does it matter whether lawyers looked at the documents on the server? What is the difference between looking at data that is on someone's server, and looking at that information after it has been illicitly downloaded from the server? Would you feel any better about me if you learned I was not the one who went into a house to take papers off someone's desk, but instead I had an arrangement with the household butler to take them, and then I read the papers only after he came outside and handed them to me? What about if I read them a month after he took them, would that be better? 

So let's return to the Graves quote from the Kansas City Star story:

“They’re trying to cast these aspersions on us by saying that on March 11 (2006) we were with these girls in a trailer and got on the State [Snake] Farm Web site and viewed stuff,” Graves said. “The depositions State [Snake] Farm cites don’t say that.”

A fair inference from the Kerri Rigsby testimony is that lawyers named Chip, Mary, Tony and Todd were in the trailer on March 11 -- a fair inference, for that is what she said.  Again, she could be mistaken, but since she was there and was the star of the show, her words carry some weight on this issue.  Neither of the Rigsbys said Chip, Mary and Todd watched as the information was downloaded, although neither said this did not happen, either. It does appear, however, that a fair reading of the Cori Rigsby deposition is that Tony DeWitt read documents off her computer on March 11, 2006, and possibly also that he was in control of her computer as well, doing what exactly we do not know for sure.  But we can say with some degree of assurance that he was not using the computer, for example, to get online and play chess against Shredder, because his purpose in being at the trailer had to have something to do with the False Claims Act case that was filed the next month. 

Whether this means Tony viewed the documents when they were on the server or after they were downloaded is not clear, but again, does that really matter? Even if Chip, Mary and Todd were not present at all on March 11, isn't the real question whether they viewed and made use of the documents knowing how they were obtained? And if Tony DeWitt was in the trailer on March 11, which appears to be the import of the testimony, are not the others charged with the knowledge of their colleague? Also, in the quote, who does "we" refer to?  

Just sayin'.

One thing I don't think I've seen to this point is a categorical denial that Robertson or Graves ever met with the Rigsbys in the trailer, nor have I seen a denial that they knew how the documents were obtained and viewed and made use of them anyway.  This latter element would be hard to deny, in my opinion, in that the lawsuit is based on the documents and the Rigsbys are the plaintiffs.    

Also, let's just focus ever so briefly on the last Graves quote from the story's excerpt:

“You’re not supposed to be able to go in court and just throw things up there,” Graves said. “Maybe in the blog world you can, but that’s not how you’re supposed to plead cases.”

I don't remember, in all the many stories that were done before about the "whistleblower" Rigsby sisters and this False Claims Act case, was there any peep from Graves or Robertson about how the publicity might unfairly affect the other side, or about how judges were too dumb to make up their own minds on the evidence?  In the story, Robertson also says, apparently speaking of State, er, Snake Farm, "I know they’re trying to sell a story, but it would be useful if they’d try to get the facts before trying to influence improperly any judge who might be reading the Internet." 

The other pro-Rigsby stories, it seems, would not confuse a judge who just happened to pick up the paper or sign on to the Internet, but Trailer Lawyer stories will.  Hmmm.  This is an interesting defense, not particularly persuasive in my opinion, that suggests judges cannot withstand the power of the Internet, and that Snake Farm is behind blog posts on this issue, at least insofar as it wrote a juicy storyline that will get bloggers stoked.  In case you want to look, here's a copy of the Snake Farm memorandum in support of its Motion to Disqualify Trailer Lawyers.  I know one thing Snake Farm is not responsible for, however, and that is the testimony of Cori and Kerri Rigsby -- and the Trailer Lawyer story comes from them. So whatever the truth is, these allegations originate with the lawyers' own clients. 

Incidentally, if we are going to keep talking about the Trailer Lawyers, we are going to need an official theme song.  Considering the first line of this song, I can't think of a better one. 

"Queen of my Double Wide Trailer" by Sammy Kershaw would also be a good theme song: http://www.youtube.com/watch?v=ncGZWQGkNzc

Great song, oh and today's blog was good too.

Shouldn't the FBI be investigating the conduct of Trailer "Chip" & "Todd."

David,

I love your reports, and this is one of the first things I check every morning. Thanks for keeping things light hearted and witty, all while being informative! Imagine that!

As someone in the insurance industry it is nice to some some non-biased reporting of the facts. I am tired of the industry bashing (though, some of it is deserved). Thanks again, and keep on writing. I can't wait to see Trailer Lawyers on Broadway!

I have held this comment as long as I can. Graves and Robertson give new meaning to the term "trailer trash."

Maybe "I fought the law and the law won" would work! It would be a great Scruggs Nation theme song anyway. No trailer references though.

There's a problem with "I Fought The Law" as a theme for this The lyrics include: "I needed money 'cause I had none."

A lawyer involved in one of the Scruggs-related cases suggested "99 Years (and one dark day)" Here's the spoken intro:

"THIS HERE IS A SONG ABOUT LIFE IN PRISON
IT'S CALLED 99 YEARS AND ONE DARK DAY
THE NINETY-NINE YEARS ARE THE YEARS YOU'RE IN THE PRISON
AND THE ONE DARK DAY IS THE DAY YOU DIE
AND IT'S TOO BAD FOR YOU......"

David, you need a better name for the "Trailer Lawyers." I keep getting confused. Down here in MS, we have other trailer lawyers... we have the ones still working out of trailers, we have 'em that hunt up business from people who live in trailers, and then we have that sub-species, the plaintiffs' lawyers rounding up former and present FEMA trailer residents to put together a formaldehyde class.

MDC, I hadn't counted on the proliferation of sub-categories of trailer lawyers. I think we'll keep the name Trailer Lawyers for these Trailer Lawyers, and if and when the others hit the radar we'll have to come up with a new name for them.

" One less trailer" by the Trailer Park Troubadors looks like a candidate! Not sure how catchy the tune is though. Is Trailer Park Troubadors too glamorous a name for the Katrina clowns?

http://www.unhitched.com/lyrics/lyrics%20dd%20one%20less%20trailer.htm

Lyrica link

In the Margolies article, Chip Robertson is quoted as saying, "[State Farm is] just plain wrong about this, and the way they operate, it’s not surprising." Talk about chutzpah! The way THEY operate? Correct me if I'm wrong, but State Farm is the only party that keeps coming up smelling like a rose in these proceedings. It's the folks on the other side of the table from State Farm who keep getting their knuckles rapped for bad behavior. And, Mr. Robertson, how EXACTLY is State Farm "just plain wrong"? Are you saying you weren't in the trailer? Then, just say it!! Or, are you saying you WERE there, but this particular trailer had twelve rooms and 5,000 square feet, and while you were in one area performing pro bono services for needy Katrina victims, you couldn't possibly know what was happening in the trailer's other wing? Or, are you saying that you were there, and you knew what was happening, but heck, all this cyber-stuff is real confusing, and it isn't like anyone was actually TAKING documents out of files or anything -- all you were doing was looking at a screen from your folding chair four feet away, and besides, you're an ex-state supreme court justice, for gosh sakes, so how dare anyone question your integrity? Which one??

Now hang on here, Entertained, let's be charitable. Could be some folks were in the trailer but not looking at the computer because they were watching Days of Our Lives, eating Doritos and drinking a six-pack of Schlitz while paging through a People magazine.

If you were the Rigsby sisters and you found some information about the people you work for that implies that they were defrauding the US Government, what would you do? Unfortunately they had to meet in a trailer because . . . all the houses were slabbed! DUH!

Bellesouth,

It is hard to tell when people are being sarcastic in this format, so forgive me if you were, but the main file (McIntosh)that the Rigsby sisters were pointing to saying the payment was made under flood and not under wind as it should have been, was a file that one of the Rigsby sisters made the call on what policy to pay it under and issued the check. Maybe they were whistleblowing themselves? If so, that seemed to work pretty well for them.

I don't think it was sarcasm.

It is obvious BELLESOUTH is still in a state of denial or needs to lay off the sweet potatoes. If the sisters and their cohorts had merely traveled approximately 1/2 mile north of Dickie's trailer lot, they could have conducted their covert operations in an intact home with only a few (if any) shingles missing.

Oh, Thick, and whose home would you suppose that would be? I see you don't share any empathy for the destruction down there.

As long as you're looking for theme songs, here's one for the other side:
http://www.youtube.com/watch?v=_jNWPUFNA2U

SnakeFarm? What about AllSnake? Or NationSnakeWide? Can't just blame SF for the snake infestation on the coast.

A comment from Kansas:
"The internet sites are two bit right wing blogs that would love to see snake farm skate. One is run by an insurance attorney trolling for new clients."
Oh David, you seemed like such a nice chap too.
And no, I've never seen a snake skate: would that be on thin ice?

I've been called worse by better. I think certain people would object less to my point of view if I weren't so effective in presenting it.

Bellesouth,

I think you mistake empathy and free handout. I do feel sorry for the destruction caused by Katrina. I don't feel sorry for the people who didn't buy flood coverage. Do you see the difference there? Now, go read your HO insurance policy and tell me where it covers flood. Oh, you don't know where your HO policy is? You've never read it? You are certain it covers flood? Here's your government check. Please step aside as others need to belly up as well.

What happened to Graves' assertion that he was at Disney World? See http://primebuzz.kcstar.com/?q=node/11109

Dustin, unless you're a lawyer, you probably have never read "and understood" what your HO insurance policy states -- they are complex and complicated documents. Hell, if they were simple, then lawyers couldn't disagree as to the meaning of their terms and provisions, and coverage attorneys like Rossmiller wouldn't have as much business. So your comments, that suggest that the unfortunate people on the Gulf Coast "should have known" what their HO insurance policies did and did not cover, are unfounded and way offbase.

My husband and I sent money to the Gulf Coast after the hurricane. We opened up our home to people who needed a place to stay. We helped rescued pets. I think that proves my empathy. That said, the sad truth is that when you sign a contract (an insurance policy is a contract) it is your burden to know what your rights and obligations are. Period. You should have known. I don't think people on the Gulf Coast are idiots incapable of understanding basic homeowner coverage. My guess is that most people did know, but didn't think it was necessary to buy flood coverage or even full coverage because they were willing to gamble that nothing like Katrina was likely to happen. Simple case of thousands of underinsured people duped into believing they have a right to something they actually don't based on a very good PR campaign from Dickie & Co.

Justus, it is not hard to find the massive amount of advertising (billboards, radio spots, mailers) done by NFIP and the local governments for years that practically screamed YOUR HOMEOWNER POLICY DOES NOT COVER FLOOD.

The City of Biloxi sends out extensive, easy to understand information outlining the fact that your homeowners policy does not cover flood to all residents every year. They send it right to homeowners mailboxes. These messages often are wrapped around hurricane season and say you need flood insurance in addition to your homeowner policy.

Every year at the beginning of hurricane season, and whenever a hurricane is aiming for the coast, the likes of CNN run stories emphasizing that homeowners policies don't cover flood including storm surge (though they never mentioned that in their post Katrina stories. They all learned that, again, when they covered the same issue to a much lesser degree following Hurricane Ivan in 2004. I guess there wasn't enough slabs there for Scruggs to do his good work in fighting fraud by the insurance companies.

I'm sure you can find plenty of stories telling the same message in the local papers and TV stations.

The mortgage companies told the homeowners too.

Its amazing how everyone saw the CNN and 60 Minutes "whistleblower" stories, but somehow missed the years of widespread and ongoing advertising and media reports about the need for flood insurance, especially in coastal areas.

What a bunch of sanctimonious BS!

99% of the people who have insurance policies don't know exactly what their policies do and don't cover.

Example: A tornado blows down three 60-yr. old trees in your yard; one tree destroys a common fence; one tree hits your neighbor's house; and one tree leaves a crater in your yard the size of a small swimming pool and hit one of your cars parked in your driveway. Right now, without looking, 99% of the non-insurance layman wouldn't know if their HO policy covers: 1) replacement of the fence; 2) the neighbor's house damage; 3) repairing the crater in the yard; 4) paying the cost to remove the trees; 5) paying the cost to repair the car; and 6) paying for the diminution in value of the automobile once it is repaired (i.e. the value of a previously wrecked auto is less than one never wrecked)

I don't care if you read it or not, you have to be an insurance coverage lawyer to know what's covered and what's not. And, half the time, even the intelligent insurance coverage lawyers disagree as to what is and what is not covered under policy language. So, how is the average layman supposed to discern what's covered. Oh, I know -- everyone should hire an insurance coverage attorney to review and interpret your insurance policy for you before you buy it. Uh huh, that's really practical and makes economical sense.

I suppose that Trent Lott was ignorant too, huh? And, Gene Taylor, too? I suppose that everyone who didn't have insurance to cover water damage from a hurricane was either: a) too ignorant to have read or understood their insurance policy terms; b) too cheap to buy the insurance coverage that they knew that they would need to cover water damage from a hurricane (but they weren't too cheap to buy a policy that would only cover wind damage from a hurricane); or c) too damn lazy to buy the right insurance coverage for hurricane damage. Right -- we're all stupid or lazy in Mississippi, especially on the MS Gulf Coast. BS!

If insurance policy coverage wasn't complicated, there would be no coverage lawsuits -- period.

Don't get me wrong, I'm not defending someone who failed or refused to obtain insurance coverage "if" they knew that all hurricane damage was not covered. But, the average consumer has a right to expect that if he/she bought a policy that provided "hurricane coverage", then it covered all of the damage caused by the hurricane, whether by wind or by water. Most people differentiate damage by "flood" from damage by "hurricane", and don't think of them as synonymous.

If you buy a "fire" insurance policy for your home, do you think that you need a separate insurance policy for "smoke" damage? Of course not -- everyone knows that if you have a house on fire that you're going to have smoke! But, what if you had a house fire with extensive smoke damage, and the insurance company said "sorry, but the policy only covers fire not smoke; you should have had a separate policy to cover your smoke damage"? The same could reasonably be said of water damage from a hurricane. I've never heard of a hurricane without both wind and water. So, if I'm told by my insurance agent, or if I have a hurricane coverage endorsement, I'm likely going to assume that I have coverage for wind and water damage from the hurricane. But, alas, some insurers want to say that it's not "hurricane damage" -- instead, it's "flood damage".

The bottom line is that HO insurance policies, in reality, are contracts of adhesion, regardless of what any court may say to the contrary. And, the current HO insurance policies are not written in a manner which makes it easy for a layman to read and determine at the outset what may be covered and what may not be covered. That's jmho. Of course your mileage may vary.

Justus,

Way off base comments? I didn't realize that because something may be difficult to understand one is void of any obligation to figure out what it means. I will try that next time. Your honor, that insurance policy has lots of words. Some of em are big! How was I supposed to know what it did and didn't cover? It is not my fault....please give me some money.

I am not a lawyer, but my job depends on reading the insurance contract and understanding what it says (more commercial, but I have applied what I learned to the HO policy as well). While I agree it does take certain a understanding to comprehend the extreme nuances in the contract (which in some cases are there because of creative lawyers able to poke holes through the language, no offense David!), it does not take a rocket scientist to see: Exclusions FLOOD! I just have to sympathy for those who didn't read what they signed. For the agents who said your policy is "all risk," that is a different story. I don't see where my comments are off base regarding those without Flood insurance. The information is out there for you to find if you can't understand the contract.

What about those with flood insurance whose houses were not only flooded but severely wind damaged and then the insurance companies field off the wind damage on NFIP saying it was all flood and then make tax payers pay instead of themselves? Because THAT is what we are talking about here. Or what about those houses that were destroyed by hurricane force WINDS for 4 hours before getting "flooded"?

Dustin, I hope that you never have an important expectation in your life that is not fulfilled. But, I'm sure that you won't because you are intelligent and have all of the answers -- no corporation will ever take advantage of you because you can read!

Please do me a favor and help Rossmiller and all coverage attorneys get an honest job by writing your Congressman. Tell him/her that all coverage litigation should be thrown out of the courts of the U.S. because there is nothing to argue about with regard to insurance policy terms and provisions -- they say what they say, and that's all there is to it, regardless of what either the insurer or the insured may argue to the contrary.

I am not saying everyone is MS is stupid. I do have a question, though. If someone assumes something is covered (i.e. flood), without reading the policy to determine if it is true, or asking someone who knows, what do you call that person?

Sorry for the double posting. Justus, thanks for putting words into my mouth I never said. I certainly didn't say I am intelligent, nor do I pretend to have all the answers. Insurance policies are difficult to understand, and people can argue whatever they like. I just find it hard to believe that people don't realize their HO policy does not cover flood. For those who had both flood and hurricane coverage, I don't pretend to understand how those claims could be settled as it is over my head.

I also don't think that people have a basic right to expect that hurricane coverage includes flood. I think there is enough information out there available for people to know flood and hurricane are different causes of loss on HO forms.

I would also argue that even if insurance policies read plain as day, people would find someway somehow to sue.

Justus, you are exactly right. Insurance contracts are contracts of adhesion, and rightly so. That is exactly why they have evolved into the state that they are in. Virtually every word in insurance contracts have been tried in court for one reason or another. And when ambiguity is found, the insurer loses. Again, rightly so. They then adjust the wording to be more specific on the intent of the language to avoid ambiguity in the future.

The flood exclusion is the perfect example. Originally policies just excluded "flood" but that was found to be ambiguous. Did that mean surges, tidal waves, dams breaking, flash floods, etc. etc? As a result, additional words were added to for clarity. However, those additional words were then used in the recent Sher case to again argue ambiguity. There it was argued since it listed some types of floods as examples, but not every way one could ever define a flood (probably limitless), then it was ambiguous. Fortunately, sanity prevailed in this case.

Layman terminology tends not to be specific. When you say green do you mean olive, light green, dark green, etc. etc. Insurers must have predictability in how the contracts are going to be interpreted in order to establish appropriate premiums. Some insurers tried layman terminology type contracts years ago and got hammered due to the ambiguity.

To believe an “uncomplicated policy” would eliminate coverage lawsuits is absurd. Anytime money is involved, and big money at that, in a contract situation there is always going to be lawsuits. There is no such thing as the perfectly written contract or the application or handling of said contract. Insurers would love nothing more than that so they wouldn’t have to spend so much of your premium dollars defending the intention of the contract in court.

Question:

Where in your (pre-Katrina) HO insurance policy does it state that water damage from a hurricane is considered uncovered flood damage instead of damage caused by a hurricane?

If a policy was that explicit, then I would agree that the homeowner was (or should have been) on notice that their HO insurance policy didn't provide coverage for water damage from a hurricane, and they should have obtained separate/additional coverage for the HO excluded flood damage.

What do you call an insurance policy that doesn't explain it?

By the way, in the "Example" that was given by me above, it actually happened in Jackson, MS, a few weeks ago when five tornados ripped through the city. Guess what, after the tornado, the insurance agent was contacted and asked what was covered and what wasn't covered, from those items that I listed above. His representations (post-tornado) were different than what the insurance adjuster said would be covered. So, if the HO insurance policy was so simple to understand, how is it that the insurance agent who sold the policy didn't even agree with the insurance adjuster as to what was covered by the policy -- after all, the policy simply says what it says, doesn't it?

I have read this blog for sometime but never felt an urge to post until now. As pointed out above, Insurance policies must be written the way they are due to the fact they are legally binding contracts and will be interpreted as such. Also, the language is quite often dictated by the state in question.

And for the record, I believe Trent Lott actually got paid money by the NFIP, but he refuses to disclose how much.

Oh, so many on here are masters of misdirection because they simply can't/won't answer the direct and hard questions at the heart of the issues.

Seriously...

"...unless you're a lawyer, you probably have never read "and understood" what your HO insurance policy states -- they are complex and complicated documents. Hell, if they were simple, then lawyers couldn't disagree as to the meaning of their terms and provisions, and coverage attorneys like Rossmiller wouldn't have as much business."

Insurance contracts are complicated precisely because simple wording has been subjected to decades of coverage litigation, resulting in more and more complexity. There was plenty of disagreement over old, simple policies.

Simple =! clear, as illustrated by a recent post of yours, JUSTUS, as follows:

"Where in your (pre-Katrina) HO insurance policy does it state that water damage from a hurricane is considered uncovered flood damage instead of damage caused by a hurricane?"

If the courts generally agree with you, the insurance industry will no doubt clarify the language in the HO policies, making them longer and more complex than they presently are (though possibly clearer!).

It's unfortunate, and I don't know the answer to the problem of ever-increasing complexity. I wish I did, despite the fact that less coverage litigation might cost me my job. I could find another job.

That said, every homeowners policy I've ever had has a big fat stamp or other large warning on it saying "THIS POLICY DOES NOT COVER FLOOD" and advising me to check out flood insurance offered by the gummint. I don't have to dig into the policy to see it.

I checked the flood maps for my area and made a concious decision to not buy flood coverage. I'm not unsympathetic to people who lost their homes. That sucks. But that doesn't mean their loss is covered under their insurance policy.

"Oh, so many on here are masters of misdirection because they simply can't/won't answer the direct and hard questions at the heart of the issues."

And some won't accept an answer unless it fits into their pre-conceived notions, no matter how direct the answer may be.

Simplicity does not necessarily equal clarity. In fact, quite often, simplicity may mean more ambiguity, not less.

It is up to the policyholder to carefully read their policy just as it is up to every individual to read every contract they agree to. If a person is reasonably expected to abide by the terms of other contracts and to have read such contracts then why is it all of the sudden unreasonable to expect an individual to have read their Homeowners Policy (also a contract) and abide by the terms therein?

Water Damage

Water Damage means:

a. Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;

b. Water or water-borne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump or related equipment; or

c. Water or water-borne material below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure;

caused by or resulting from human or animal forces or any act of nature.

Direct loss by fire, explosion or theft resulting from water damage is covered.

That is where my policy says water is not covered, whether wind driven or not.

I say an insurance contract that doesn't explain it is bad news for the insurance company. Ambiguity goes to the claimant.

I will try to not misdirect the conversation again. Thanks.

Well, my last post hasn't shown up yet -- guess it's lost in Rossmiller's outer space or something.

Anyway Xerac, you give me an urge to post something too. It's this:

Insurance policies are agreements that embody rights and obligations of the parties for the protection of the expectation interests of "both parties", INCLUDING THE EXPECTATION INTERESTS OF THE INSURED, and NOT JUST THE EXPECTATION INTERESTS OF THE INSURANCE COMPANY!

Insuring is a risk, and therefore, by definition, it's unpredictable. The insurance industry, however, wants to eliminate unpredictability, thereby eliminating its risk.

That said, an insurance company shouldn't be forced to cover risks that weren't contemplated types of risks to be covered by a policy. By the same token though, an insured should have a protected "expectation" that his/her policy covers the risks reasonably contemplated from a "fair" reading of the policy, or as represented to them by an insurance agent.

Bellesouth said: "What about those with flood insurance whose houses were not only flooded but severely wind damaged and then the insurance companies field off the wind damage on NFIP saying it was all flood and then make tax payers pay instead of themselves? Because THAT is what we are talking about here." No, Bellesouth, that's what Dickie was talking about. He was talking about that through well-paid witnesses with stolen documents, one of whom signed off on the flood payment before calling it "fraud." And, since then, Dickie and the others who were trying to sell us their bill of goods, well, they've gone on to other careers (maybe dishwashing, license-plate-making or working on the railroad all the livelong day). Just because you've always hated insurance companies is no reason to keep spewing venom in their direction now, when your smoking gun has been thrown in the gulf and keeps washing farther out to sea.

An intelligent response - thanks, Rob.

If you've read this entire string, you'll see that I don't defend any insured's failure to purchase additional insurance "if they were properly put on notice" of the need of the additional insurance. My position is quite the contrary.

But saying that "THIS POLICY DOES NOT COVER FLOOD" is not connecting it to hurricane damage in my mind, especially if I have an endorsement for hurricane coverage or my agent told me I had hurricane coverage. In common parlance, a "flood" is not the same thing as water damage (wind driven) from a hurricane, or even a "storm surge". To me, a "flood" is an event where a river or stream gets out of its banks. But, the very fact that we, as semi-intelligent people, can differ on how we interpret the term "flood", is an indication that usage of that term can lead to ambiguity. So whose "expectation" interest should be protected, and whose should not, when the insurance company intends one meaning to a term(s), but the insured reasonably interprets the term(s) differently -- should the big insurance company automatically win/lose or the insured automatically lose/win? What's the answer?

Dustin, you weren't the misdirector.

But, if your policy defines "water damage" as stated above, does that mean that you need to purchase a "Flood Policy" if you don't live on the coast, but you still want coverage for water damage in case you are hit by a storm? I had storm damage years ago, and the damage included soaked carpet from water driven by wind into the house. My HO insurance policy covered that "water damage", but if it had your definition, I guess that I would have been SOL.

What was it that one of the LA supreme court judges said in the Sher ruling, something like "the entire English speaking population understands what a flood is......." something along those lines.

Quote:

"Insurance policies are agreements that embody rights and obligations of the parties for the protection of the expectation interests of "both parties", INCLUDING THE EXPECTATION INTERESTS OF THE INSURED, and NOT JUST THE EXPECTATION INTERESTS OF THE INSURANCE COMPANY!"

That is not accurate. In those jurisdictions that have some sort of "expectation interest" coverage concept, it addresses REASONABLE expectations. In the face of the flood exclusion quoted earlier in this thread, there can be no reasonable expectation that the policy covers flood. There can only be an UNreasonable expectation, which gets one nothing.

Quote from MISSISSIPPI LAW JOURNAL [Vol. 77]

Tens of thousands of homes, businesses, schools, churches,
and other buildings near the Mississippi Gulf Coast were destroyed
or damaged by the combination of wind and flooding.
The Commander Naval Oceanography and Meteorology Command
(CNMOC) at the Stennis Space Center has established that coastal Mississippi suffered four hours of hurricane force
winds before the storm surge.1 Unfortunately, in many cases,
there was not enough physical evidence remaining to determine
how much damage had been caused by wind before the surge.
Inland, where there was no flooding, insurance companies
paid hundreds of thousands of wind damage claims totaling billions
of dollars. Insurance companies paid Katrina wind claims
in every county in Mississippi, every parish in Louisiana, most
of Alabama, Northwest Florida, and even into Tennessee and
Georgia. Yet, on the Mississippi Gulf Coast where winds were
strongest, thousands of homeowners were left with uncovered
losses because these companies denied their claims for wind
damage.
Because it was difficult to prove how much damage was
caused by wind and how much was caused by flooding, the central
legal question regarding wind/water disputes is which party
has the burden to prove the cause of damage. Does the insurance
company have to prove how much damage was caused by
flooding in order to exclude wind coverage, or does the policyholder
have to prove how much damage was caused by wind in
order to collect on a wind policy?
State Farm, Allstate, Nationwide, USAA, and several other
major insurers took the position that they would only pay for
wind damage that was separate from any flooding.2 Any damage
that they deemed to have been caused by the combination of
wind and flooding was to be excluded from their wind coverage.

* United States Representative Gene Taylor represents the Fourth District of Mississippi.
He serves on both the House Armed Services Committee and the House Transportation
and Infrastructure Committee. In addition, Representative Taylor serves as
co-chair of the Shipbuilding Caucus, National Guard and Reserve Caucus, Coast Guard
Caucus, and Expeditionary Warfare Caucus. He is also a member of the Conservative
Democrats’ Blue Dog Coalition.

Y'all are missing part of this. Yes, there were some homes that were deemed in the flood zones before Katrina that did not have flood insurance and they received funds from the government. However, tha majority of homeowners who did not have flood insurance were not considered to be in flood zone before the storm and were not required to have it. And if you had asked about it, the insurance agents would try to talk you out of it, and told you did not need it. This is because many areas flooded in Katrina did not flood in Camille, and the flood maps were based on Camille.

Just wanted to clear up that we weren't just sitting around waiting for the next storm so we can get some money from the government and some free MREs. We felt very safe that since water did not reach our homes in Camille, we would not have the water damage that many of my friends ended up having to deal with.

The wind/water debate is very difficult to deal with in that it always seems to end up benefitting the insurance companies and costing taxpayers more money.

I wouldn't say the debate always ends up benefitting the insurance companies. Think about the bad press, litigation costs, etc. Granted, some is deserved for botched claims, but the insurance companies are not coming out scratch free. I certainly hope the agents were not trying to talk people out of flood (can we say E and O!). I would be curious to know the people not in a flood zone, who wanted to purchase flood and were talked out of it by their agent. I wouldn't think that would be the norm, but I could be terribly mistaken.

I also don't buy the line, we weren't in a flood zone and weren't required to have it. Not saying you are putting that forward as a defense. I just don't buy it from other people.

JUSTUS,

I have to disgaree with your assertion that homeowners on the coast are too uneducated and illiterate to read their homeowmers policies. They are not written in German or French! Furthermore, the federal agency that offers flood insurance has run regular television, newspaper, and radio ads telling homeowners specifically that their homeowners' policies DO NOT COVER FLOOD, obviously this is the reason flood insurance exists.

I lived on the Mississippi Coast for 4 years myself, and I witnesses these ads running all year long at regular intervals. The bottom line is that people gambled with their insurance coverage to save money, and unfortunately they lost big!

Partial Coastal,

There may have been coastal insurance agents who discouraged the homeowner buying flood insurance, but many sent out regular mailings to their homeowner's policyholders asking them to consider flood insurance!

I know it was a favorite tactic of the plainmtiff attorneys in the Katrina cases to say that the agents told the policyholders they didn't need flood insurance, but logically does this make sense to anyone? Agents receive a commission from the sale of a flood policy. Some have said that it isn't a big commission, but homeowners insurance doesn't pay a big commission either. Most agents run their business by trying to write a large volume of policies so that the smaller commissions add up to something larger. Flood insurance would be encouraged just as homeowners insurance would be by an agent.

My personal beleif is that this notion is pure plaintiff attorney mythology. It is far more likely that the homeowners would ask the agent if they are required to have flood insurance (by their mortgage company), and in some cases the answer would be no. If the homeowner took that to mean "you don't need flood insurance" then that certainly isn't the agent's fault!!!

Quoted from Justus: But saying that "THIS POLICY DOES NOT COVER FLOOD" is not connecting it to hurricane damage in my mind, especially if I have an endorsement for hurricane coverage or my agent told me I had hurricane coverage.

I do see his/her point above and wanted to point that out Reason (as your post does not necessarily address that argument). While I still believe that insured has an obligation to read the policy, I can see Justus' points.

I think there is a difference between policy does not cover flood, and policy covers hurricane damage, but not the subsequent flooding. Am I understanding you correctly, Justus?

Dustin,

E&O certainly would not apply to this situation. If you own a home that is 2 miles inland and you ask the agent if you need flood insurance, his answer will be purely his opinion based on past experience. To suggest that his discouraging the purchase of flood insurance in an area that hasn't flooded in more than 35 years would constitute basis for a E&O claim defies logic.

To my knowledge there is no legal requirement for insurance agents to posses psychic abilities. In order to provide a perfectly correct opinion on the subject of whether a property that hasn't flooded in 35 years may or may not flood in the next 35 would require such!

Dustin,

I understand what he is saying, but Katrina is far from the first hurricane to strike the area. Sure Camille struck many years ago, but several have struck in the interim.

The notion that any unexpected event, such as flooding in an area where flooding does not typically occur, should be the responsibility of the insurance companies is ridiculous.

The bottom line is this, the federal government did not have to pay out a lot of money beceuse the insurance companies refused to, they had to pay out a lot of money because people on the Mississippi Gulf Coast have chosen to build houses in and live in an extremely high hazard area for hurricane damage, and particularly the flood component of that. Evidence of that? Two of the top 5 storms in history have decimated the area!

Dustin,

One more brief point, the endorsement did not provide hurricane coverage, it just applied a higher deductible to it.

HUGE difference.

Dustin, I think we're on the same page. But, I'll try to clarify a little more.

I don't think that the language "THIS POLICY DOES NOT COVER FLOOD" should act to automatically supercede or trump if either: a) an insured's policy has an endorsement for hurricane damage, or other language that could contradict the no flood coverage language; or b) the insured was told by the insurance agent that hurricane damage was covered (if an agent failed to qualify that representation by stating that only hurricane "wind" damage, and not hurricane "water" damage, would be covered under the policy.

A layman shouldn't be forced to second-guess his/her agent, and shouldn't have to "de-code" an insuance policy, or "guess" which conflicting policy language would prevail. Anyone can be tricky with contract language, intentionally or unintentionally, by defining terms with meanings that are different than the ordinary meaning that laymen give those terms. For example, defining a "flood" overly broad to include "water" that is wind-driven, which most laymen would consider to be "rain". I'm not pointing to any particular policy language, I'm just saying that re-defining "ordinary terms" in a manner that gives them meaning different than that as ordinarily understood by laymen will necessarily invite misunderstanding and lawsuits with individual consumers.

In commercial settings between businesses, it's a different story because of the relatively equal bargaining positions, and the ability to more readily obtain professional advice.

That's jmho, and your mileage may vary.

"Insurance policies are agreements that embody rights and obligations of the parties for the protection of the expectation interests of "both parties", INCLUDING THE EXPECTATION INTERESTS OF THE INSURED, and NOT JUST THE EXPECTATION INTERESTS OF THE INSURANCE COMPANY!

Insuring is a risk, and therefore, by definition, it's unpredictable. The insurance industry, however, wants to eliminate unpredictability, thereby eliminating its risk.

That said, an insurance company shouldn't be forced to cover risks that weren't contemplated types of risks to be covered by a policy. By the same token though, an insured should have a protected "expectation" that his/her policy covers the risks reasonably contemplated from a "fair" reading of the policy, or as represented to them by an insurance agent."

It is still a matter of reading your policy, not just presuming something. It is reasonable to expect one to ask questions, read the policy, etc. In fact, every year policies are sent with the renewal notices. Insureds have plenty of opportunities to read what their policies do and do not cover and to see if there are any changes. I think it is reasonable to expect people to read what they have.

" don't think that the language "THIS POLICY DOES NOT COVER FLOOD" should act to automatically supercede or trump if either: a) an insured's policy has an endorsement for hurricane damage, or other language that could contradict the no flood coverage language; or b) the insured was told by the insurance agent that hurricane damage was covered (if an agent failed to qualify that representation by stating that only hurricane "wind" damage, and not hurricane "water" damage, would be covered under the policy.

A layman shouldn't be forced to second-guess his/her agent, and shouldn't have to "de-code" an insuance policy, or "guess" which conflicting policy language would prevail. Anyone can be tricky with contract language, intentionally or unintentionally, by defining terms with meanings that are different than the ordinary meaning that laymen give those terms. For example, defining a "flood" overly broad to include "water" that is wind-driven, which most laymen would consider to be "rain". I'm not pointing to any particular policy language, I'm just saying that re-defining "ordinary terms" in a manner that gives them meaning different than that as ordinarily understood by laymen will necessarily invite misunderstanding and lawsuits with individual consumers."

Justus, you bring up some good points. However, the law does stipulate that if certain conditions are defined then it does supercede. It's not a matter of second-guessing, it's a matter of law. And the old fall-back of "my agent didn't tell me" is not a defense since the law clearly stipulates it is our responsibility to read a contract and ask for clarification. And the defense of "my agent told me differently" becomes a matter of "s/he said, s/he said". Tough to prove in court and once again, read what you sign. It is a matter of Caveat Emptor.

http://mslj.law.olemiss.edu/downloads/05%20Taylor%20Mar%2018.pdf

From the Mississippi Law Journal posted above.

... the central
legal question regarding wind/water disputes is which party
has the burden to prove the cause of damage. Does the insurance
company have to prove how much damage was caused by
flooding in order to exclude wind coverage, or does the policyholder
have to prove how much damage was caused by wind in
order to collect on a wind policy?
State Farm, Allstate, Nationwide, USAA, and several other
major insurers took the position that they would only pay for
wind damage that was separate from any flooding.2 Any damage
that they deemed to have been caused by the combination of
wind and flooding was to be excluded from their wind coverage.

Less than one week after Katrina, Nationwide issued a
document instructing its adjusters that “if loss is caused by both
flood and wind there is no coverage.”

Two weeks after Katrina, State Farm issued a memorandum
that instructed its adjusters that “[w]here wind acts concurrently
with flooding to cause damage to the insured property,
coverage for the loss exists only under flood coverage, if available.”

...

One week after Katrina, Mississippi Commissioner of Insurance
George Dale issued a bulletin advising insurance companies
that they had to prove that a loss was caused by flooding
in order to deny wind coverage.5 State Farm and other companies
ignored the bulletin and the Department of Insurance did
little to enforce it.
Seven months after Katrina, Commissioner Dale wrote to
State Farm reiterating that the company had the burden of
proof and further advising that the Anti-Concurrent Causation
Provision in State Farm’s policies did not eliminate the company’s
obligation to prove the cause of loss and to apportion
damage between wind and flooding.

I hate to join a post essentially post haste, but seriously, has BelleSouth been in Disney Land or stuck in a trailer watching Andy Griffith re-runs for the past six months or so? Her posts have absolutely no touch with either reality, or the current environment surrounding Katrina litigation. I am beginning to pity the poor girl. And Belle, by the bye, pity and empathy ain't the same thing.

Justus, at least you're interesting.

Hank & Dustin, Actually I heard from quite a few homeowners that had asked about buying flood insurance but were blown off and made to feel silly for asking by their local agents. Some of these homes were several miles from water but got several feet during K anyway. The Insurance companies did not stand behind their agents and prefer to just deny that it was ever said. Homeowners learned a very valuable but sad lesson. Also, agents were not motivated to write flood insurance because their fees for that were not lucrative nor felt to be worth the time it took to do the paperwork.