Wednesday, August 16, 2006

Wind and Rain

Insurance companies have two primary functions: selling insurance policies and denying coverage under those policies when at all possible. The cross-correlated damage caused by Hurricane Katrina provided an excellent opportunity for insurance companies to engage the latter function and they jumped at it, denying that flooding was covered by hurricane insurance. Thousands of lawsuits poured into the courts.

In a big smooch to insurance companies, a Mississippi federal judge has ruled that insurance companies are not liable for flooding in hurricane policies, though they will have to cover wind damage. The reasoning is obvious: hurricanes are just wind. They don't cause flooding.

Hey, I'm not making this up. Expected future ruling: insurance doesn't actually cover anything. Pay up and shut up.

This decision, while understandable in strict legal reasoning, is another nail in New Orleans' nearly hammered shut coffin. A year later, the FEMA bungling and contract abuse that has seen billions squandered while New Orleans remains mostly unrefurbished was enough to show us all the government was not going to get that job done. There was really only one way that the city would be rebuilt and it was going to be up to the residents to do it. Insurance company refusal to support policy holders in this dire hour and this decision have mostly closed the last remaining avenue by which New Orleans might be restored. At least before Disney moves in and turns it into a theme park.

[via News Dissector]


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