Flooding Leaves a Tangle of Insurance Claims

Insurance claims adjusters have fanned out across Alabama, Mississippi and Louisiana to begin the daunting task of deciding how much to pay out on hundreds of thousands of homes damaged by Hurricane Katrina. The situation is complicated because many people who have basic homeowners coverage, do not have coverage for flood damage.

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With all those damaged buildings, insurance companies are facing huge payouts as a result of Hurricane Katrina. The damage from the storm is estimated at anywhere from 25 to $40 billion, and the job of processing the thousands of claims will be monumental. NPR's Jim Zarroli visited a mobile claims unit operated by State Farm Insurance in Gulfport, Mississippi, today and has this report.

JIM ZARROLI reporting:

Until last week Highway 49 in Gulfport was a busy stretch of commercial roadway lined with car dealerships and fast-food restaurants. Now, after Katrina, many of the buildings here are boarded up and half obliterated. It is here that State Farm has set up its mobile catastrophe unit in a tent in a parking lot of a closed-down home products store. It's a place where policyholders can come and file claims for hurricane damage, and on this humid summer morning several dozen people have shown up to do so. They're people such as 79-year-old Elizabeth Rooney, whose house was damaged in the storm.

Ms. ELIZABETH ROONEY (Hurricane Survivor): It has roof damage, the front porch, the garage door, the back door. It's things that adds up.

ZARROLI: Still, Rooney feels lucky. The house next door to her was completely destroyed by Katrina. State Farm covers about 30 percent of the homeowners policies in Mississippi and Alabama, and it's beginning to process a huge number of claims from Katrina. State Farm spokesman Kip Diggs.

Mr. KIP DIGGS (State Farm Insurance): Basically, people come in. People come in and tell us what they have. They describe the level of damage to us. We ask the questions to find out, OK, how's the roof? How's the house? What--how many broken windows do you have?

ZARROLI: Once a claim is filed, the company has to inspect the damage and decide how much to pay, and no one knows how long that will take because large sections of the damaged region are still closed to the public. The payouts are likely to be further complicated by another factor. Insurance companies cover their customers for damage from hurricanes, but not floods. But in the case of Katrina it may be hard to say whether a house was damaged by the wind or water, and many people expect bitter disputes between insurers and their policyholders over the issue. Diggs says disputes may take place but they'll be handled fairly.

Mr. DIGGS: Occasionally there'll be disagreements and we try to work on those and we try to settle those to the letter of the law.

ZARROLI: But for now there are more pressing concerns. Nat Shafer(ph) is a nurse at a nearby Air Force base. When the storm hit, water came in through the roof of his apartment building, destroying everything his family owned. He's already filed a claim. Now he's come to ask State Farm agent Eddie Gray(ph) what to do with his waterlogged furniture.

Mr. NAT SHAFER (Hurricane Survivor): Mold everywhere. I'd like to keep it in a garbage can. (Laughs)

Mr. EDDIE GRAY (State Farm Insurance): You gotta keep it till somebody looks at it, though.

Mr. SHAFER: OK. Well, is there--there is nowhere.

ZARROLI: Many people have come here today to file automobile claims. An enormous number of cars were damaged in the storm, and a lot of people have brought their vehicles to be inspected.

Mr. JERRY ZEITSAS(ph) (State Farm Insurance): Can you go ahead and open up the trunk for me real quick.

(Soundbite of trunk opening)

Mr. ZEITSAS: Go ahead and look for some water in your trunk.

ZARROLI: State Farm's Jerry Zeitsas is looking at a 1993 Cutlass Ciera that's been brought to the site. The rear window was blown out by the hurricane, which is clearly covered by the policy. But Robert Haney, whose mother owns the car, says the transmission has been acting up since the storm. Zeitsas is dubious about the claim.

Mr. ZEITSAS: Unfortunately, there's nothing that we can see that would have caused the damage to the transmission.

Mr. ROBERT HANEY (Hurricane Survivor): Yeah, I know. ...(Unintelligible).

Mr. ZEITSAS: So what we'll go ahead and do is if you take it into a shop...

Mr. HANEY: Yeah.

Mr. ZEITSAS: ...and they see anything that the transmission could be related to the storm whatsoever, we'll be happy to go ahead and discuss it with the shop and get you taken care of then.

Mr. HANEY: OK. OK.

Mr. ZEITSAS: All right?

ZARROLI: Haney nods and goes off to await a check for the broken window. This site was opened on Friday. It's already seen an average of 500 customers each day. Jim Zarroli, NPR News.

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