The state of Mississippi has started legal proceedings against at least five insurance companies which could force them to pay out billions of dollars in damages to victims of Hurricane Katrina.
The state’s attorney general, Jim Hood, said standard insurance polices led homeowners to believe they were covered for all hurricane damage, whether from high winds or storm surges.
To deny coverage to those whose homes were wiped out by the storm surge, but lacked flood insurance, is “taking advantage of people in the most dire straits,” he said.
“We intend to … make sure the insurance companies pay all that they owe these people on the coast,” Mr Hood said.
Noting that the storm surge damage has been estimated at between $2bn and $4bn, he asked a chancery court to nullify provisions in the policies that attempt to rule out cover for losses or damages directly or indirectly caused by water, whether wind-driven or not. He said he would seek a restraining order next week pending a full hearing.