Katrina Insurers to Be Investigated

By William Murphy

Published on October 10, 2006

The bill was added to the Homeland Security Appropriations Act by Senator Trent Lott (R-Mississippi), whose waterfront home in Pascagoula suffered heavy damage in the hurricane. The central purpose of the investigation is to uncover whether insurers wrongfully attributed wind-caused damage to flooding. Insurance companies cover wind damage, but not the flooding caused by Katrina's storm surge. Flood damage is covered under the National Flood Insurance Program.

Lott and U.S. Representative Gene Taylor (D-Mississippi), whose Bay St. Louis house was damaged during Katrina, have filed lawsuits against State Farm Fire & Casualty for denying their claims of wind-caused damage to their homes. Both congressmen had flood damage coverage, but maintain the hurricane's winds contributed to the destruction.

State Farm and other insurance companies insist they paid policyholders full compensation according to insurance policies. The insurers stated that they cannot provide compensation for damage that was not covered and for which no premiums were paid.

The inspector general's office is required to report its findings by April 1.

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