State high court gets wind-water damage case

The Mississippi Supreme Court should follow federal precedent and rule out insurance coverage for hurricane damage caused by a combination of wind and water, the USAA insurance company argues.

Ultimately, only damage caused by water, either alone or in combination with wind, would be excluded from coverage under the USAA homeowners policy, USAA says in a legal brief submitted to the court, which hasn't decided whether to hear the Hurricane Katrina case. "Any damages a jury determines to have been caused solely by wind would be covered. This is consistent with Mississippi law, public policy, the provisions of the USAA policy, and the manner in which USAA adjusted the claim."

Attorneys for Long Beach policyholders Magruder S. and Margaret Corban want the court to determine how the policy should be applied before the case is tried in state court. The 5th U.S. Circuit Court of Appeals has ruled that "anti-concurrent cause" clauses in insurance policies bar coverage when wind and water act in sequence to destroy property.

The Corbans' attorneys want the Supreme Court to rule that wind damage is covered, regardless of damage caused by the independent peril of water, or throw out the "anti-concurrent" clause as "hopelessly ambiguous as well as contrary to Mississippi public policy."

The Corbans contend that wind destroyed their property before the storm surge arrived, but USAA says the surge washed out the first floor of the home, with only mild wind damage to the second floor. The Corbans have collected $350,000 in flood insurance. Their home was insured for more than $1 million. USAA has paid them almost $40,000 for wind damage to the house and an outbuilding, plus $40,000 in other coverage.

A jury will determine whether the Corbans are owed any additional money once the causation issue is resolved. Circuit Judge Lisa Dodson followed the 5th Circuit's ruling in the case, but said a common-sense reading of the insurance clause indicates to her that only water damage is excluded from coverage. Her ruling will stand unless the Supreme Court agrees to decide the issue.

Policyholders of America has filed a brief in support of the Corbans' position, adding that collapse provisions in insurance policies also should apply to the damage. State Farm plans to file a brief in support of USAA's position.

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