Insurance Coverage Dispute Settled
Landmark Katrina Insurance Case Settled
April 15, 2010 | Sun Herald (Biloxi, MS)
Apr. 15--GULFPORT -- A landmark Katrina insurance case, Corban v. USAA, has been settled on undisclosed terms, both parties confirmed Wednesday.
USAA attorney Greg Copeland, Corban attorney Judy Guice and USAA's public relations office all offered the same comment: "The case was settled to the satisfaction of both parties."
They said they would be unable to elaborate.
The lawsuit, filed by Long Beach policyholders Margaret and Magruder S. Corban, had been scheduled for trial in circuit court Monday.
The Corbans requested, and both parties agreed, key legal issues needed to be settled before trial.
Circuit Judge Lisa Dodson sent the case to the Mississippi Supreme Court for answers in April 2008 against a backdrop of federal court rulings that supported insurance companies.
Hundreds of policyholders settled their cases based on an erroneous 2007 ruling from the 5th U.S. Circuit Court of Appeals.
The federal appeals court decided "anti-concurrent cause" language in insurance policies excludes wind from coverage when storm surge contributes to the loss.
However, state law governs insurance policies, so the state Supreme Court's decision would take precedent. That decision did not come until October 2009. The Supreme Court confirmed previous rulings that insurance policies exclude storm surge from coverage.
USAA argued its anti-concurrent clause negated coverage for damage caused by a combination of wind and water, saying the company covered only damage caused "solely by wind."
The Supreme Court found USAA's anti-concurrent clause did not apply to the Corbans' losses because wind and water acted as separate forces, causing loss independently of one another.
Once a direct physical loss was established under the Corbans' all-perils policy, USAA could deny coverage only by proving the loss was caused by storm surge, covered through the National Flood Insurance Program.
USAA has widely portrayed the Supreme Court decision as a victory for the insurance company.
On Wednesday spokesman Paul Berry referred the Sun Herald to a statement the company released after the Supreme Court's decision.
The statement says, in part: "The court endorsed USAA's claims-handling policy in Hurricane Katrina. USAA paid for damage caused solely by wind but did not pay for damage caused by storm surge."
The Supreme Court noted in its opinion that, before trial, USAA had paid $83,903.77 for damage to the Corbans' beachfront home.
Federal flood insurance paid the maximum coverage of $350,000.
The Corbans had claimed a total of $1.2 million in losses.The settlement reached before trial is confidential.
http://www.insurancenewsnet.com/article.aspx?id=180357&type=propertycasualty