Read the Fine Print
As everyone knows, Hurricane Katrina caused property damage that has never been witnessed before in America. One would assume that insurance companies would really be in a state of panic with all of the claims that have or will arise by homeowners. However, this article suggests that this is most likely not the case. This is the case because very few homeowners are covered for flood damage beyond an optional Federal $250,000 policy that is available by the government. In most cases the insurance policy states that the homeowner is covered for rain and wind damage. The problem is that most of the damage is caused by flooding even though the rain and wind are the perils of the situation. As the article states, insurance companies may be able to escape 15 billion in payouts based on this wording in their policies and prior contract law outcomes. With this knowledge, it is nice to know that the premiums being paid by millions of homeowners are safe earning interest in the insurance companies investments.
Posted by Dan at 9/24/2005 11:02:00 AM