Friday, September 16, 2005

Mississippi's Attorney General wants to tear apart the foundation of contract law

The Mississippi Attorney General is playing politics with live ammunition here; Mississippi attorney general sues 5 insurance firms:

Attorney General Jim Hood sued in state court in Jackson, Miss., alleging
that the insurance companies are skirting claims by insisting that damage to
homes was caused by flooding, which isn't covered under homeowner policies.
If this goes through, it has major ramifications for the insurance industry, contract law and the economy in general.

Everyone else also knows that insurance companies don't cover floods. That's one of the reasons Congress developed the National Flood Insurance Program (NFIP):

The National Flood Insurance Program (NFIP) is a federally subsidized program authorized by Congress in 1968 to protect property owners who, up to that time, were unable to secure flood insurance through the private insurance industry. The program is administered by the Department of Homeland Security’s Federal Emergency Management Agency (FEMA).

They were "unable to secure flood insurance through the private insurance industry" because the private insurance industry wasn't offering it!


When your home is flooded, it can lead to financial ruin if you don't have the proper insurance. And note this: A basic homeowners policy won't cover your flood damage! You need flood insurance — a special policy backed by the federal government, with cooperation from local communities and private insurance companies.

About 200 insurance companies, possibly including the company that already handles your homeowners or auto insurance, write and service flood insurance policies for the government, which finances the program through premiums.
The Mississippi Attorney General already knows this; so one can just assume that his efforts are nothing short of political grandstanding.


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