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Federal judge finds insurer not compelled to cover Katrina-related water damage

[JURIST] A federal judge in Mississippi ruled Tuesday that Nationwide Mutual Insurance Company [corporate website] was not obligated to cover a policyholder's claims for water damage caused by Hurricane Katrina [JURIST news archive]. The trial was the first resulting from hundreds of lawsuits against insurance companies [JURIST report] that refused to pay for some Katrina-related damage. After an eight-day bench trial, Senior District Judge L.T. Senter Jr. [official profile] of the US Southern District of Mississippi [official website] awarded an additional $1,228 to homeowners Paul and Julie Leonard, of Pascagoula, who received $1,661 from Nationwide but estimated damage to their home at more than $130,000. In his opinion [PDF text; order and judgment, PDF], Senter wrote:

The provisions of the Nationwide policy that exclude coverage for damages caused by water are valid and enforceable terms of the insurance contract. Similar policy terms have been enforced with respect to damage caused by high water associated with hurricanes in many reported decisions.
Senter also found the evidence insufficient to support the Leonards' claims that their insurance agent had "misled them by implying that their Nationwide homeowners policy would cover water damage caused by storm surge flooding."

The Property Casualty Insurers Association of America (PCIAA)[trade association website] praised the decision [PCIAA press release] as allowing "insurers and other businesses in the state to operate without a lingering cloud of uncertainty about the validity of their contracts, which will help energize both the insurance market and the economy of Mississippi." Senter is presiding over virtually all of the Katrina-related insurance cases in Mississippi [JURIST news archive]. AP has more. Bloomberg has additional coverage. From Biloxi, the Sun-Herald has local coverage.

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