Perhaps Lynda can explain why this is the policyholder’s fault?

From the oral arguments in Corban, of which Lynda is obviously not familar. In Nationwide’s world it wasn’t the covered peril that controls, rather the mythical uncovered peril that might have destroyed the property had that pesky covered peril not occured.

JUSTICE PIERCE: So you’re sequencing, if 95 percent of the home was destroyed, and then we have the event of the storm surge, then you would not pay a dime?

MR. LANDAU: Your Honor, if we prove that the storm surge was sufficient to cause – we have that burden, again, and that is absolutely crystal clear.

If we can prove that the storm surge was sufficient to cause all of this, it is no answer then to say, ‘Yeah, but I’m going to show it — I’m going to have somebody come in and say, “Look, guess what, the window was broken before the storm surge came and then wiped away the whole house.

But you don’t get into those kinds of issues precisely because of the sequencing of the damage.

JUSTICE PIERCE: So you wouldn’t pay a dime?

MR. LANDAU: If – again, we wouldn’t pay a dime for things where we can carry our burden, which is right there in the policy, of showing that the loss was caused concurrently –

JUSTICE PIERCE: I’m giving you — the example is 95 percent of the home is destroyed, the flood comes in and gets the other five percent, and you know that.

Does your interpretation of the word “sequence” mean you pay zero?

MR. LANDAU: Yes, your Honor.

Lynda care to guess how the court ruled on this? Denial is a terrible thing.

sop

20 thoughts on “Perhaps Lynda can explain why this is the policyholder’s fault?”

  1. I’ll explain it…but you won’t listen. The answer is, the policy had a “Concurrent Causation” clause that EXCLUDED the damage, regardless of whether wind or water came first. The exclusion was in the policy when the policy was issued. The insured had a copy of the policy. Had the insured READ his policy, he would have KNOWN of the exclusion and COULD HAVE ASKED his agent for a policy that did not have this exclusion. His agent COULD HAVE provided such a policy. And he COULD HAVE provided flood coverage. Again, if the insured had simply purchased adequate Flood insurance, the concurrent causation clause in his homeowners policy would be totally irrelevant. The Flood policy would have paid 100% of the loss up to the limits of the policy. The insured could have rebuilt. No problem. The ONLY reason there is a question of coverage regarding the Nationwide policy is BECAUSE the insured either did not buy flood insurance AT ALL or didn’t buy sufficient limits.

    So, to recap: The insured could have bought sufficient flood insurance and could have recouped 100% of his loss through that flood policy. And, he could have read his policy, discovered the limitation of his coverage and, at least, made an informed decision about whether to keep that policy or buy something different. He did neither of the these things. And, that why it is HIS fault.

  2. Actually the problem isn’t that I’m not listening but before I comment further I’d like you to add some color to your recap paragraph. Are you saying that Flood Insurance or Excess Flood insurance covers wind damage? If not then what kind of wind policy would you recommend for the Corbans?

    sop

  3. While we wait for Lynda to give us more insight into insurance contracts and anti concurrent causation how about a few words from our ‘sponsors’:

    [youtube=http://www.youtube.com/watch?v=_fW8jMWiLXo]

    [youtube=http://www.youtube.com/watch?v=pXpUVxhZggY]

    [youtube=http://www.youtube.com/watch?v=f51maMnJHdc]

    [youtube=http://www.youtube.com/watch?v=6pzNSoS7Nb4]

    [youtube=http://www.youtube.com/watch?v=6HNKqffU3Cc]

    and my personal favorite that appears only on Youtube

    [youtube=http://www.youtube.com/watch?v=M7NIWYeIxmE]

    sop

  4. Lynda, as the MS Supreme Court correctly reaffirmed, an insurance loss attaches when the loss occurs. As far as I know that has always been the law everywhere. The Nationwide interpretation has never been affirmed by anyone.
    A loss caused by hurricane winds is a covered loss. It does not become uncovered if flooding happens hours later.

    The National Flood Insurance Program offers single-peril coverage for losses caused by flooding only; not for losses caused by wind before any flooding. If Nationwide or any other Write Your Own insurer knowingly billed NFIP for losses caused by winds, they commmitted fraud. They have a contract with NFIP that requires them to handle flood claims and combined wind and flood losses with a fiduciary responsibility to NFIP and federal taxpayers. They are explicitly not allowed to exploit their conflict of interest by billing NFIP for wind losses. They also should be required to explain how they divided the wind loss from the flood loss at each property that suffered damage from both perils, and should be required to prove how much of the loss had been caused by flooding in order to deny coverage under their own policy. In many states, they would not be allowed to ignore this responsibility.
    Many of the Katrina wind/water cases involved homeowners who did have flood insurance, but the total loss cannot be assigned to flooding if flooding was not solely responsible for the loss. NFIP is not intended as a taxpayer subsidy of the insurance industry’s liabilities.

    1. I’ll add that the overwhelming majority of HO policies are written on a standard form approved by the MID. The ACC is on virtually every policy and is non negotiable. Policies underwritten by non admited carriers would be the exception to this but represents a tiny fraction of the market’s capacity.

      Insurance Defense Attorney David Rossmiller, whom Lynda should know from his Scruggs/Delaughter blogging has written extensively on the ACC and argues it does not apply to Hurricanes and was never intended to serve as a trap door to void the very peril for which the policy was purchased. The reasoning is simple, Hurricane losses occur sequentially (in the case of Katrina the wind blows very hard for several hours then the surge arrived) not concurrently (ie a noncovered peril simutaneously with a covered peril).

      Again with standard form policies the consumer has no ability to negotiate pricing or terms. Legally this is known as a “contract of adhesion” and clauses that are ambigious are resolved in favor of the insured. Though the courts don’t generally use this line of reasoning with the ACC it doesn’t change the fact that allowing insurers to sell bait and switch policies that contain trap doors is plain bad public policy as it is nothing but a glorified scam.

      Finally as other lawyers have pointed out there is also the long standing common law rule that coverage follows premiums. I think that too has it’s roots in preventing the kind of trap doors that void coverage for otherwise covered perils also known as bait and switch scams.

      Lynda I took the liberty of reading your comments about Bobby Delaughter on the Folo blog. While the guts it took to post your comments using your real name is admirable I was reminded of the denial remarks I directed at you a day or so ago. In particular I was thinking of DARVO, which a read of your comment on this thread well illustrates. It was also the standard MO at that old Folo blog, a defense mechanism, used to attack Cori and Kerri Rigsby or run you off.

      You seem like a decent person and I know your company didn’t act badly but if you want to keep your head buried in the sand please be my guest. The decision makers and our advocates in DC know the score even if the political class that is owned by the insurers up in Jackson pretends otherwise because it is in DC and the Federal Courts that will make the remedies.

      Finally back to Bobby Delaughter. When our judges forget that we are a nation of laws rather than a nation of men terrible things happen. The only Judge in this country lazy and intellectually stupid enough to put her name under your new fangled interpretation of the ACC is a right wing idealogue named Edith Jones who is the chief judge in the fifth circuit. One of her more notorious rulings involved upholding the murder conviction of a man whose public defender slept through the proceedings. Suppose Delaugter is innocent like you think, what kind of chance you reckon even an innocent man has with that kind of judge? The politization of our judicial system cuts both ways.

      sop

  5. I don’t want to dogpile here, as I really am interested. To what agent or firm should I take my business if I want to avoid an anti-concurrent causation clause? Who, for just a plain old $150,000 house, will write such a policy, and how much will it cost? I, unlike many consumers, am aware that I can sometimes bargain to buy down my wind deductible, or to reduce the amount the company claims it would cost to rebuild my house. But I am unaware that I can bargain to change the policy terms for an H0-3 or similar policy.

  6. Brian, I understand what the court “affirmed” but I take issue with the idea that it was “correct”. It is a BIG problem for Mississippi that the courts here too often fail to uphold the terms of an insurance policy. That is exactly why so many insurance companies refuse to do business here and why those that do have to charge more for their policies because they are so unsure of what the court will force then to cover.

    Yes, an insurance contract is a “non-negotiable” contract (to some extent) but that shouldn’t make it invalid. Very few contracts are fully negotiable. Before entering into any contract, you can (and should) know what terms are negotiable and which ones are not. You can (and should) know how one company’s contract compares to another before you buy. (For example, a new car warranty. One has a 50,000 mile/36 month warranty. Another has a 100,000 mile/5 year warranty. You DO take this information into consideration when you buy, don’t you? If NOT, should you be entitled to the 100/000 mile warranty just because you didn’t know you had an option to buy a different car with such a warranty? )

    Now, there ARE some exclusions/limitations that appear in ALL insurance contracts…just as there are some exclusions/limitations that are common to every automobile warranty. Example: Homeowners policies do not cover “water damage”. Auto warranties do not cover “road hazard” damage. There is a valid reason for these exclusions and that is: “IF” these hazards were included, the losses expected from those hazards would have to be included in the base price of policy (or the price of the car, in the case of warranty). MOST people don’t WANT to pay for this increased cost because MOST people don’t need protection for those particular perils, therefore the coverage is not included in the base contract. But, the people who NEED and WANT protection from these perils CAN buy it.
    Again, it all comes down to personal responsibilty. Before you buy a home, you need to know how much it is going to cost to PROPERLY protect your investment. If you can’t afford it, for whatever reason, you should not buy that particular home.

    Now…the insurance industry IS getting smarter about underwriting risks located in high risk areas such as the coast. In the past, we believed (like many of you still do) that wind and water were equally destructive so, we looked ONLY at distance from the shore when we evaluated risk potential ( for underwriting acceptance AND for establishing rate need). We now know that STORM SURGE is MUCH more destructive than wind. And, we now have technology that will allow us to better predict the potential for storm surge at any particular spot. That will allow us tailor our rates and underwriting guidelines to more closely match the potential for loss from wind Vs loss from water. Homeowners with little potential for storm surge damage will find it easy to buy affordable homeowners insurance because companies will be more confident of their expected loss estimates. But, as long as companies have to pay for storm surge losses, they must EITHER refuse to write ANY policies or CHARGE YOU for the exposure. Bottom line is…the choice belongs to residents on the coast. Do all of you who are well elevated want to continue paying the price for the low-lying property owners who don’t buy flood insurance? It really is that simple. If sufficient flood insurance is purchased and sufficient limits of homeowners insurance is purchased, homeowners could avoid these problems. Let the Federal Flood program and the homeowners insurer decide between themselves how much of the damage, if any was “wind”. They’ll sort it out while you are busy rebuilding your home. (No, SOP, I’m not saying that the flood policy covers wind damage. When you’ve got a structure left standing, it is fairly easy to figure out what damage was caused by wind and what was caused by water. In that case, the HO policy would pay the wind damage and the flood policy will cover the water damage. The issue is when there is nothing left but the slab. In that case, the flood policy will cover the total loss of the structure, up to the policy limit. Period. They won’t be care if wind broke a window before the surge washed the house away. They won’t care if a few shingles were blown off the roof. The won’t even care if large tree crashed through the roof. ) They’ll pay full policy limits. THEN, if they come up with any evidence that there was some sort of preexisting wind damage, they’ll subrogate against the HO policy. THEY will do that. YOU won’t have to worry with it. You probably won’t even KNOW about it.)

  7. Lynda no one said contracts of adhesion are not valid and just because you don’t “believe” literally decades of court rulings are “correct” doesn’t give the the right to make up your own law when it suits your purposes.

    In fact all the insurance companies pay big bucks to lawyers who knew the law when those contracts are drafted. You seem to forget that but if there is a consistent theme to your positions it is one where insurers take no responsiblity for their business decisions. While the associated implications that management of these insuers are incompetence due to writing contracts where they were ignorant of the established law is amusing I don’t think it is the reality here. What does it say about the predatory mindset in ‘insurance by Lynda’ where consumers need to get legal representation before they do business with an insurance company and polices they were purchased to cover wind damage don’t. Imagine what a mess it would be if everyone needed lawyers before they opened a bank account, obtained a credit card and the like. I don’t think I like Lynda’s world and I know it is not reality.

    You are right about standing structures being easy to adjust. In the case of Tom MacIntosh the evidence was very clear and the engineer said so and was fired for writing such a report. Tell me Lynda is this good claims adjusting?

    Another question I asked you did not answer was exactly what kind of wind policy does a coastal policyholder need to purchase, given the ones they had and were charged for did not pay. Please be very specific in your answer and also deal in the reality that the law was very well established in this area?

    Also you were aksed to explain Nationwide’s position that if wind destroyed 95% of the house and flood the rest why Nationwide by their own admission would not pay a dime. Explain what basis in the law prior to 2005 and post Corban that would support such a position?

    Also Jamy asked you a question regarding anti concurrent causation and the HO3 form policy that contains several non negotiable clauses including ACC.

    For those interested in learning facts over spin here are some good links from our archives:

    Anti-concurrent causation intended to contractually overturn efficient proximate cause

  8. I hate back to back posts but this one question I think cuts to the heart of the matter though the ones so far left unanswered are also important.

    So Lynda for the sake of argument lets say I agree with you that the policyholders didn’t read the policy and understand its meaning or hire a lawyer to do so for them. Let’s further suppose that a few policyholders did just what you suggested and read ther policy and reserached what they did not understand in the terms (after all insurance lawyers need insurance too).

    When researching the anti concurrent clause the policyholder found this article by a noted insurance defense lawyer:

    In a 1985 article about the drafting of State Farm

  9. My posts are going to be out of order because I’ve got one thing on my mind that I need to address before I respond to your other comments. It concerns the Corbans. I’ve clipped a segment of the news release regarding the Supreme court ruling that demonstrates WHY companies run scared of Mississippi. The issue is whether their HO policy excluded “storm surge”. Here is the clip:

    “The homeowner

  10. SOP & Gonesouth, Brian said the courts had “correctly” held the concurrent causation clause to be unenforcable. I said that I do not believe their opinion to be “correct” That is MY opinion and, last time I checked, I was still entitled to it. The concurrent causation clause has been around for decades and over the course of the years, courts across the county have affirmed that the concurrent causation clause is NOT ambiguous and IS enforceable. What makes this particular court so much more intellegent that all the ones that came before? In MY opinion, they ruled incorrectly.

    SOP, regarding your comment: “So now explain to me, like I am in 6th grade, exactly how a learned policyholder would know their insurer would suddenly

  11. Actually I said none of what you claim Lynda, probably because you don’t listen. I have said 3 times now that the courts ruled the ACC did not apply to an all risk wind included homeowners policy in a Hurricane. That wasn’t unexpected though because it’s meaning was clearly defined when the langauge was drafted.

    You may think that contract language is open to new intrepretations based upon nothing but mere whims and after the fact conjecture. I think it is funny you cite the flood exclusion as some sort of example of why insurance costs are high. Give me one example where a policyholder prevailed on with a flood claim on their wind policy. You can’t just like you failed to back up anything you said.

    Still though your insight most valuable in several areas and I thank you for providing it. Cult de-programers in particular certainly are deriving the warm fuzzies associated with the continued job security.

    [youtube=http://www.youtube.com/watch?v=9FEho5cgynk]

    sop

  12. There are many more examples of “wrong doing” than the “handful” of cases reported on SLABBED. Most of those were cases that closed before there was a SLABBED. Many of those were the some 30K+ cases “settled” [sic] in the sham MID Mediation – reported the result of former MID-assistant Commissioner Lee Harrell’s relationship with one or more members of the Southern District Federal Court. Follow the money, Harrell is now employed by insurance defense firm that represented State Farm in case filed by the Attorney General.

    For the record, we have consistently recognized and expressed concern for our friends and neighbors who work in the insurance industry. They, too, are victims of Katrina.

  13. Nowdy, Lynda has deluded herself into believing the anti concurrent clause somehow voids wind coverage in a Hurricane depsite us linking documents from those who were around when the clause was drafted including State Farm’s general counsel. Reasoning with someone so disconnected from reality is a total waste of time IMHO.

    sop

  14. wow, this is a “doozy” – gotta jump in this one even though I have homework that must be done tonight in Psy. 400 (“Interviewing Techniques”).

    Except from one of Lynda’s comments above (and I picked this one cuz it interests me and I don’t have the time – or the knowledge – to address EVERYTHING herein – but you guys are doing a GREAT JOB replying anyway):

    “You can (and should) know how one company

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