Court sanctions insurance robbery of Katrina victims

In the immediate aftermath of Hurricane Katrina, Louisiana residents suffered as the government, at all levels, failed to respond. Today, they are casualties of the profit-driven insurance companies.


An appeals court ruled on Aug. 2 that thousands of home and small business owners cannot recover money for




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Katrina-related damages.


They cannot collect a dime from the insurance policies they paid into for years.


Insurance companies originally denied Katrina victims coverage by saying that the flooding was an “Act of God” not covered by the policies. Insurance adjusters also denied coverage for bogus reasons unrelated to the damage inflicted.


“The chimney was not built properly” was one such feeble excuse. Others whose homes were ruined or whose doorframes and furniture were warped by humidity were also denied.


More than a dozen insurance companies participated in this massive fraud, including giants like State Farm, Travelers and Allstate.


The policyholders filed suit to make their paid-for insurance policies work.


In November 2006, U.S. district judge Stanwood Duval Jr. ruled in favor of the policyholders. He criticized the policies’ ambiguous language and held that the flooding was caused by faulty levees, not by an “Act of God.” Despite the ruling, the insurance companies refused to take a financial hit and appealed.


The 5th Circuit Court of Appeals reversed the ruling in favor of the insurance companies, saving them an estimated $1 billion in claims. Judge Carolyn King opined, “This event was excluded from coverage under the plaintiffs’ insurance policies, and under Louisiana law, we are bound to enforce the unambiguous terms of their insurance contracts as written.”


Flood damage often is excluded from homeowners’ insurance because it happens in many areas of the country and paying for damages hurts industry profits.


This terrible example of robbing from those most in need reveals the true nature of the insurance industry.


Companies happily accept monthly premiums but fight tooth and nail to avoid providing actual coverage. Their ever-increasing profits are made possible by destroying the lives of thousands of working-class people.

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