One of the plaintiff’s attorneys is Richard Scruggs, who made a name taking on tobacco companies in the nineties, who is “testing the flood exclusion of homeowners’ policies that insurers are using to deny paying numerous losses stemming from the 2005 hurricanes.”
The focus for the first several days of testimony has been on the Nationwide agent, Jay Fletcher, “who the Leonard’s contend told them that they did not need to purchase flood insurance because their policy protected them against all hurricane-related damage.” The Leonard’s initial complaint alleged Fletcher “had maintained they would have coverage against hurricanes and its resulting ‘storm surge.’” Furthermore Fletcher allegedly “told the Leonards they did not need to purchase flood insurance.”
A spokesperson for Nationwide, Joe Case, stated, “Mr. Leonard had flood insurance on a prior policy before he became a Nationwide customer. He has testified he understood the policy and his admitted understanding refutes the notion that he relied on his agent’s advice.”
This case breaks down into two arguments; my word against yours, and the flood exclusion. I imagine the judge will side with the plaintiffs over what the agent said unless someone recorded the conversations between the parties that will refute the plaintiff’s allegations. Of course that is highly doubtful.
If the judge rules against Nationwide in regards to the flood exclusion then a precedent will be set. The argument is whether damage was caused by wind or the wall of water that surged to shore. Wind damage is covered but even wind driven water is not covered let alone a surge of water. However policyholders are saying the surge of water should not be considered flooding.
This will be very interesting to see the outcome as it will affect thousands of other victims of Hurricane Katrina.
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