‘It’s The Wind, Stupid’

I just watched the live, streaming testimony from the U.S. House Financial Services Committee, which is conducting hearings about Hurricane Katrina and insurance practices.  Mississippi Attorney General Jim Hood was among those who testified, and included in his remarks was the statement: "It’s the wind, stupid." My feed was a little slow with the video image, so it’s not clear to me if he was talking to himself or someone else. 

One thing is clear from Hood’s testimony, however: Hood is mixing up the anti-concurrent cause clause in State Farm policies with a subsection of the clause, which is a simple flood exclusion, and he is also mixing that up with a different concept entirely — what is the burden of allocation of proof  between insurer and insured.  You can check out the language of a State Farm policy yourself here in this pdf (see page 4). He appears to be saying that State Farm’s position is that it owes no money for wind damage if a flood subsequently destroys the house.  That is incorrect, as I keep pointing out.  State Farm is not saying that.  These are tough concepts, but wouldn’t you think someone who filed suit against insurers within two weeks after Katrina and conducted a criminal investigation into claims practices would have that straight by now?  You can’t cover this stuff up by uttering slogans like "it’s not about the water, it’s about the wind," which is another thing Hood said during his testimony.

He also said that "taxpayers got dumped on" by the insurance companies.  Hood apparently was referring to the fact that the National Flood Insurance Program paid out a great deal of money on homes with flood insurance, because Hood also said insurers owe money to the federal flood insurance program. Huh? I thought it was the wind, stupid. Now it’s about the water? How can insurance companies owe money to the flood insurance program when flood insurance covers floods, and homeowners insurance covers wind but not floods. Does that make any sense? Of course it doesn’t.  

8 Comments

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8 Responses to ‘It’s The Wind, Stupid’

  1. Katrina Victim

    Look at the written testimony of Taylor as to the finding in the reports issued by Haag Engineering. They discounted and ignored NOAA data and U.S. Navy Meteorology and Oceanography command in reaching their conclusions to wind damnage. State Farm continued to use Haag even with a long history of bad faith litigation and judgements involving their use. Go read the opinions and judgements in the psst.

  2. Are you talking about Rep. Gene Taylor or someone else? If it’s Rep. Taylor you refer to, I heard him talk yesterday in the U.S. House Katrina hearings, I’m not too impressed. He’s a self-interested party too.

  3. Katrina Victim

    Go to http://www.marrlawfirm.com click State Farm class-action and press room read about State Farm in Oklahoma.

  4. If you’re talking about the punitive damages case, I’m aware of it and in fact I blogged about it some time ago. You might be new to my site, and I appreciate your taking the time to read. My purpose is neither to trash insurance companies or defend them. I try to provide objective analysis. The Scruggs Katrina Group blog is a very good blog and a good place to read stuff that puts down State Farm. As you may or may not know, I do not work for State Farm and in fact I have never worked for State Farm, nor as it happens have I ever sued State Farm. So as far as State Farm is concerned, I am only trying to interpret case law and developments as I see them and I have no absolutely no interest in making State Farm look good or bad.

  5. Anita

    I am not a lawyer. I am not a State Farm policyholder. I have not sued any insurance companies – and don’t plan on doing so at any point in the future. Why, then, you may ask – am I posting a comment on this post? We rode out Katrina in our home on the MS Gulf Coast. We had wind damage and we had water damage. Because we were eyewitnesses – it was very easy to determine which of the ‘w’s caused what damage — as well as in which instances there was damage by wind before water was present. Our insurance policy includes anti-concurrent language that is identical to that found in State Farm’s policies. However – we were told on more than one occasion by our agent, claims representative, and adjuster that absolutely nothing that was ‘touched’ by storm surge would even be considered in the claim — and the anti-concurrent clause was cited. We were also denied loss of use coverage under the anti-concurrent clause – although the wind damage alone made the dwelling temporarily uninhabitable. So it looks like Mr. Hood isn’t the only one having trouble with interpreting that clause.

  6. First, I’m sorry about the damage to your home from the storm. The damage sounds extensive. I hope everyone in your family made it through the hurricane OK>
    I’m glad you posted a comment, because you’d be the perfect one to ask. What percentage of the damage was assigned to wind and how much to flood? Do you generally agree with the assessment? Did you have flood insurance?
    As far as the anti-concurrent language, it is simpler in concept that it reads. Because of the way some policies are organized, with the anti-concurrent lanaguage appearing at the top of a heading and exclusions appearing beneath it, some folks mistakenly and broadly refer to the whole thing as an “anti-concurrent cause” clause. That’s not really right, and perhaps these insurance people were speaking too broadly, or perhaps they really didn’t know what they were talking about, I don’t know. The flood exclusion and a number of other exclusions are listed as being subject to the anti-concurrent language, but a flood exclusion is just a flood exclusion. Anti-concurrent language is just there to ensure that flood damage is never covered, even if it works in conjunction with other causes.
    The loss of use determination is hard for me to figure out without knowing more details and seeing the policy. In other cases, I know of people who did get loss of use who had both flood and wind, so I’m wondering, did they say you wouldn’t get money for expenses for living elsewhere while your home was repaired?

  7. Anita

    Thank you so much for the response, Mr. Rossmiller. I’m ashamed to admit that I broke one of those unwritten blog-reading rules and commented on a single post before I had actually read through at least a good chunk of your other recent posts. Better late than never, as they say. I’m fascinated by your blog.
    Yes, our house was severely damaged — and we’ve only completed about 30% of the repairs as of today. This is a slow.. slow.. slow process. We were among the ‘lucky’ ones though – we didn’t lose any loved ones and we came through with at least the shell of a house to work with.
    Now on to the good stuff! We did not live in a flood zone and did not have flood insurance. (Interestingly enough – according to the newly revised federal FIRM maps – our home is still not in a flood zone. We were told this was our 500 year flood. Yes, we have flood insurance NOW.) As far as the percentage of damage caused by wind/flood – the answer is rather interesting in retrospect: No such assessment was ever done in our case (to our knowledge). We were told that only wind damage would be assessed as flood was not covered. Our settlement papers itemized only ‘wind-damage’ items and concluded with a simple statement that water damage would not be addressed. So you see – there is no other claim in our case. Our settlement stated that 100% of our loss was covered — because any non-wind loss was not actually included. (It’s that ‘if it’s not covered then it’s not a claim’ thing, right?) Our adjuster made it clear during both visits to the property that he was instructed to ‘look above the water line’ only.
    Now I must say this (and I haven’t made a whole lot of friends saying this sort of thing around here) – there is no doubt that in our case storm surge was responsible for the vast majority of our property loss. We received a small wind settlement of $26,000 – and, quite honestly, we were in no position at the time to quibble — we needed the money. Our home property loss is estimated at a total of $190,000 (this figure includes contents).
    Our only point of contention with our insurance company’s assessment after-the-fact is that our adjuster’s claim for an entirely new roof was reduced to the patching of shingles in the settlement — as a result, we’ve lost more shingles since Katrina than we had during… But of course that has absolutely nothing to do with the wind vs. water issue. Any wind damage that was excluded ‘below the waterline’ would have been negligible in the grand scheme of things — although it did exist.
    I see exactly what you’re saying about flood exclusion vs. the anti-concurrent clause. From my experience, I think the two were muddled during the days immediately following the storm — whether accidentally or not — for the purposes of clarifying ‘storm surge vs. flood’. Our own insurance agent (who also did not personally have flood insurance) was under the impression when we initially contacted him that the ‘flood exclusion’ found in the Homeowner’s Policy would be superceded by the Hurricane Windstorm policy – as this was a case of ‘wind-driven water’ and not ‘rising water’. A few days later – we received a letter from our insurance company with the ‘anti-concurrent clause’ to clarify that storm surge is not covered. It seems that eventually the storm surge vs. flood issue was put to rest — but the muddling stuck. And that’s where we are today.
    As for our loss of use question — we also know folks who did get loss of use in almost exactly the same circumstances as our own. We did specifically ask about the coverage and we were told via telephone by a claims specialist (I think that’s what they call themselves) that we had no such coverage as our ‘loss of use’ would have been ‘at least partially’ due to an excluded event. The phone convo was followed up a few days later with a duplicate ‘anti-concurrent clause’ letter explaining the denial.
    To be fair — when the air cleared many, many months later we again contacted the insurance company (out of sheer curiosity) to ask about loss of use coverage and we were told to submit any rental receipts and they would reconsider the claim. (We’ll never know how that would have worked out, however, because we opted to stay in the gutted house since we lacked the finances to rent elsewhere without hope of reimbursement.)
    Maybe it was nothing more than human error – or a chain of human errors during a really crazy and confusing time.
    I apologize for the long-winded reply – I was really rather concise before Katrina – really I was. I have been fascinated with the entire insurance story unfolding here – but with all the venom in the local press it has been rather hard to find an objective viewpoint. I’ve really enjoyed reading your blog today – and I’ll be back to check periodically.

  8. Anita, thank you for the thoughtful and detailed reply. This information is very valuable. It sounds like you had a terrible time and suffered a lot of damage. I’m glad to see the hurricane has not beaten down your spirits or determination.
    Regarding the loss of use, I suspect the determination was that the wind damage alone would not forced you from your home, and that there would not have been a covered cause of loss behind the loss of use. I don’t know if that determination was correct, it sounds as if it may not have been. As it turned out, the issue became moot because you stayed, which I’m sure was quite unpleasant. I believe that, notwithstanding an uncovered cause of loss, if you were forced to leave your home because of a covered cause of loss, loss of use should apply.
    Your comment is interesting and makes me wonder how much many people within the insurance companies misunderstood what an anti-concurrent cause clause is. The unprecedented size of this disaster meant a lot of people were rushed out to deal with it who weren’t ready. It is possible there was an initial misunderstanding of coverage by many employees, which one hopes was later corrected. Great comment, thanks for visiting.