GULFPORT, Miss. (AP) - Provisions in Allstate Insurance Co.'s policies that exclude damage from Hurricane Katrina's flood waters are "valid and enforceable," a federal judge in Mississippi ruled last week—a setback for Gulf Coast policyholders whose claims were denied by the insurer. A couple whose Gulfport home was damaged by the Aug. 29 storm is suing Allstate for denying their claim, arguing that the wording of their policy's "flood exclusions" are ambiguous and cannot be enforced.
U.S. District Judge L.T. Senter, Jr., rejected that argument, however. On Tuesday, he ruled that the terms of Allstate's policies are "clear and unambiguous" in excluding damage from "tidal waters," which Katrina pushed ashore from the Mississippi Sound and inundated thousands of homes.
"The exclusions are drawn quite broadly, and they have the clear purpose of excluding damage caused by inundation from coverage," Senter wrote in his three-page ruling.
In an earlier ruling in the case, Senter refused to throw out a lawsuit that Elmer and Alexa Buente of Gulfport filed against Allstate—one of many suits spawned by a fierce debate over whether Gulf Coast homes were destroyed by Katrina's wind or water.
Senter ruled last month that the question of how much damage to the couple's home was caused by wind and water is a "fact-specific" inquiry that must be decided at trial.
A number of lawsuits related to wind verses water damage are pending in state and federal courts. In addition, Mississippi Attorney General Jim Hood is conducting his own investigation into how insurance companies dealt with claims from the Aug. 29 hurricane.
Richard "Dickie" Scruggs, a high-profile attorney who represents the Buentes, said Tuesday's ruling by the federal judge is not a crippling blow for the couple's case. Allstate, he added, has a "huge hill to climb" in proving that damage to his clients' home wasn't covered by their policy.
"I don't think it's a blow at all," he said. "We're going to go forward as we planned to do."
Julie Rochman, a spokeswoman for the American Insurance Association, said Senter's ruling should end the argument—advanced by Scruggs and other attorneys—that damage from wind-driven water or "storm surge" isn't specifically excluded from coverage by Allstate's policies.
"It's a big step toward ensuring that a contract is a contract in Mississippi," she added.
Allstate paid the Buentes $2,600 for damage caused by wind, but the couple says their home sustained up to $100,000 in damage.
Allstate Corp., based in Northbrook, Ill., is the second-largest U.S. personal-lines insurer behind State Farm.
Scruggs' legal team is suing four other insurance companies—Metropolitan, State Farm, Nationwide and United Services Automobile Association.
