Pair Push Insurance Coverage Change
They Say Clause Keeps Providers From Paying
as posted at www.nola.com
Wednesday, February 22, 2006
By Richard Boyd, St. Tammany bureau
Two Mandeville residents who say their homes were destroyed by Hurricane Katrina's winds, not the flooding that followed, have launched a grass-roots effort to pressure state lawmakers to strike down a clause in most homeowners policies that allows insurance companies to avoid paying many damage claims.
Bernard Smith and Paige Freeman Rosato, both lawyers, want the Legislature to adopt a bill that would bar insurance companies from including the "anti-concurrent causation clause" in homeowners policies.
Making their case in separate appearances at a public forum in Mandeville on Monday, the two said the clause allows most insurance companies to avoid paying claims for damage if they have a report from adjusters saying water, even if it was driven by wind, caused the bulk of the damage. The forum, the third in a series sponsored by the city, focused on insurance concerns and included officials from FEMA and the state insurance commissioner's office.
Rosato, who says her Sandra Lee Drive home in Old Golden Shores subdivision was destroyed by trees blown onto it before storm surge ever reached it, said the clause allows insurers to deny payment for any damage below the water line left by receding floodwaters. But Rosato said she had substantial damage from wind below that water line and that the damage preceded the floodwaters. She said it is a common occurrence throughout the area.
Smith said his home in the 2300 block of Lakeshore Drive was reduced to a pile of rubble by wind before the storm surge flooded much of old Mandeville. Before his insurer sent an adjuster, Hurricane Rita came ashore, again flooding the lakefront. "Water from Rita covered the ruins of my wind-destroyed house when the adjuster came, and he decided it was water damage that ruined my house, and my claim was denied, using that clause," he said. Smith is suing, saying that will cost him another $30,000.
If Monday's reaction is an accurate indicator, the two may have plenty of supporters when they take their cause to Baton Rouge after the regular legislative session gets under way March 27. Most of the 60 residents at the forum at the Mandeville Community Center heeded the pair's call and stood in line after the meeting to sign their names and give their addresses, telephone numbers and e-mail addresses, apparently willing to testify at Senate and House committee hearings.
Smith and Rosato, joined by Christine McPherson of a consumer advocacy group called United Policyholders that is based in New Orleans, all said they have a ally in state Sen. Julie Quinn, R-Metairie. In the waning days of the recently concluded special session, a bill sponsored by Quinn that would have removed the clause from policies in Louisiana passed the Senate but was extensively amended in the House. Smith said the bill as passed by the House says only that the water mark cannot be the sole reason for denying a claim.
"That just give the insurance companies plenty of room to find other forms of concurrence causation. The only protection for homeowners is to strike the clause completely," he said.
McPherson, who lives in Woodridge subdivision west of Mandeville, said she too had wind damage before water damage to her home.
Only Smith, Rosato, McPherson and a homeowner from Cameron Parish testified in favor of Quinn's bill before the House Insurance Committee hearing. McPherson told the Mandeville audience Monday that the committee room was packed with insurance lobbyists who succeeded in gutting the Quinn bill.
"But she is going to try again. It will be a major battle, but we need to storm Baton Rouge for the hearings with folks who can tell horror stories of how the wind destroyed their homes before the waters even came," Smith said.
Smith and Rosato said they will mail copies of the Quinn's new bill when it is available and keep people who sign up posted on committee hearing dates. Rosato said she has left a law firm where she worked for years in order to devote all her time to the cause.
Smith, Rosato and McPherson said they will be taking their case in coming weeks to forums and community meetings throughout the storm-ravaged areas seeking support for the bill.
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Richard Boyd can be reached at rboyd@timespicayune.com or (985) 898-4816.
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
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