Was It Wind or Water? Gulf Coast Lawyer Is Taking On Insurers - NY Times

Mr. Scruggs, a wealthy plaintiffs' lawyer who played a leading role in wrenching a $250 billion settlement from the tobacco industry a few years back, is furious about the hurricane - not simply that it happened, but that insurance companies might escape what he sees as their responsibility for a huge portion of the losses from the storm, those resulting from flooding.

The insurers say homeowners' policies cover wind and rain damage, but do not cover flood damage caused by hurricanes or anything else. A federal program provides up to $250,000 in flood insurance, but most people do not have that coverage.

"I'm not going to sit still for this," said Mr. Scruggs, who grew up in Pascagoula and has practiced law here for decades. "I'm going to bring every organizational and legal skill I possess to make these guys do the right thing under their policies."

At stake is a potential $15 billion worth of insurance payments. That explains why the insurance companies, which have never been successfully challenged on the "wind vs. water" issue, are equally adamant.

They have contract law in their favor, they say. Their longstanding practice of not covering flood losses resulted years ago in a federal program being specifically created to provide such coverage. Still, they worry about going to court in Mississippi, which has a reputation for being tough on corporate defendants despite recent changes in the state's legal system.

At the very least, Mr. Scruggs contended that the extent of coverage is ambiguous and that courts have ruled that it is the responsibility of the writer of the policy - the insurance company - to make the provisions clear.

Much of the damage, he said, came from storm surge, which he said was gulf water driven inland by the wind. If the insurers wanted to exclude coverage for storm surge "they certainly know how to do it," he said. "And that term does not appear."

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Jim Hood, the attorney general of Mississippi, filed a civil lawsuit in a state court last Thursday to force the insurers to pay for storm surge losses. "I'm not going to allow insurance companies to bankrupt the entire Gulf Coast by using the fine print and saying that people should have known that they didn't have coverage for water damage," he said.


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