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The American Insurance Association (AIA), the National Association of Mutual Insurance Companies (NAMIC), and the Property Casualty Insurers Association of America (PCI) today responded to the April 11 ruling by the U.S. District Judge for the Southern District of Mississippi denying a motion by plaintiffs Elmer and Alexa Buente for partial summary judgment in their lawsuit against Allstate Insurance Company. The Buente v. Allstate case centers on the actual cause of damage to the Buentes' home during Hurricane Katrina. The three national trade organizations jointly filed an amicus brief in the case.

According to the three associations, "In its ruling, the Court held that the water damage exclusion in this policy is clear, unambiguous, 'drawn quite broadly' and with 'the clear purpose of excluding damage caused by inundation from coverage.' Citing numerous prior cases, the Court concluded that, 'The exclusions found in the policy for damage attributable to flooding are valid and enforceable policy provisions.'

"The Court clearly is putting to rest the trial bar's unfounded argument in this and other cases that 'wind-driven water' or 'storm surge' is not covered by plain-language exclusions. Fortunately for all Mississippians, this ruling upholds the integrity of contracts in the state, and is further evidence that misinformed statements by plaintiffs' attorneys regarding long-settled homeowners policy language are meaningless in a court of law."

As stated by the Court, "the inundation that occurred during Hurricane Katrina was a flood, as that term is ordinarily understood, whether that term appears in a flood insurance policy or in a homeowners insurance policy." The Court concluded that, "since the water that entered and damaged the plaintiffs' home was tidal water, I find that the damage caused by this inundation is excluded from coverage under the Allstate policy."

"This and similar rulings are the essential underpinnings for a rebuilt Gulf Coast, because such decisions retain the predictability and certainty that all businesses - including insurers - rely upon when deciding where to commit resources, such as capital and jobs," concluded the three trade groups.

Editor's Note: A copy of the Court's ruling is attached.

Posted: Thursday, April 13, 2006 12:00:00 AM. Modified: Thursday, April 13, 2006 3:34:03 PM.

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