Homeowners Fight Insurance Companies over Katrina
JOHN YDSTIE, host:
After Hurricane Katrina, nearly half a million insurance claims were filed in Mississippi alone. Most have been resolved. Others have evolved into bitter legal disputes. In the planned community Diamondhead, dozens of homeowners had claims turned down by their insurance companies. The issue is what damaged their homes?
NPR's Jim Zarroli reports
JIM ZARROLI reporting:
Frank Falstidge(ph) and his wife Geralyn(ph) came to Diamondhead about a decade ago to build their dream home. They placed it on a quiet cul-de-sac overlooking miles of empty salt marshes. Standing in his yard with his friend and fellow neighbor, Curtis Lee, Falstidge remembers the paradise that Diamondhead use to be.
Mr. FRANK FALSTIDGE (Hurricane Katrina Victim): I don't care about the possession. It's the lifestyle we had here that I miss. I really do.
Mr. CURTIS LEE (Hurricane Katrina Victim): And we had our boathouses. We'd go out and hit a butt in the boat. We'd go out in the water. We would go over in the bay, sit out there and drink a glass of wine, and just enjoy the water.
Mr. FALSTIDGE: I'd sit up on my porch in the evenings, and you could watch the thunderstorms over the Gulf at night. It was beautiful.
ZARROLI: Today, all that's left of Falstidge's dream home are some pilings and empty cement slabs littered with debris, and a whole lot of angry feelings. Falstidge and Lee and their wives are part of a large group of Diamondhead residents who are waging war on the insurance companies. Lee says they call themselves the Slingshot Group.
Mr. LEE: Why the Slingshot Group? Because David slew the giant with a slingshot, and we are facing a giant under these insurance companies.
ZARROLI: The Falstidges and the Lees are among hundreds of Diamondhead residents whose property claims were partially or completely turned down after Hurricane Katrina destroyed their homes. These residents say their houses were damaged by winds that topped 140 miles an hour and should be covered by their homeowners' policies. But the companies, which include Allstate, Nationwide and State Farm, say the real culprit was flooding, which their policies don't cover. Instead, flood damage is covered by separate federal government-backed policies that are capped at certain levels.
Mississippi Insurance Commissioner George Dale says this dispute is by far the most common of the many thousands of complaints his office has received.
Mr. GEORGE DALE (Insurance Commissioner, Mississippi): Because of the wind versus water issue, it has blackened the entire issue of insurance and how the people in Mississippi were handled.
ZARROLI: The insurance don't like to discuss individual cases, but they do say they carefully and fairly analyze every claim based on available evidence, and that the vast majority of their claims are settled to the satisfaction of both sides.
Robert Phillips is a spokesman for State Farm.
Mr. ROBERT PHILLIPS (State Farm): In a catastrophe of this size and magnitude of over 84,000, we're going to run into a few that we do have some disputes on. But our goal with that is we want to try to extend coverage if we can. If we've had a possibility of extending coverage to our policyholders, we have.
ZARROLI: But policyholders in places like Diamondhead angrily scoff at such statements. They've accused the insurance companies of acting in bad faith and even using doctored engineering reports. Some have even hired engineers and commissioned meteorological studies to refute the insurance companies' claims. That often means showing that although their homes were flooded, the wind damage came first.
(Soundbite of shuffling papers)
Mr. LEE: Oh, there is something I wanted to show you right here. I had it out to show you and I lost it.
ZARROLI: Curtis Lee carries a huge sheath of documents in the back of his pickup truck, letters from lawyers, eyewitness statements, colored weather maps. Since no one was really there when Lee's house slid into the water, proving what destroyed it takes a certain amount of determined forensic work that Lee is more than willing to do.
For homeowners there is another option. They can submit their claims to a mediation service set up by the state to help avoid lawsuits. Curtis Lee says he did so, but doesn't like the way it turned out.
Mr. LEE: They started out at about 17 cents on the dollar. After about six weeks of mediation, they offered me 33 cents on a dollar last Thursday. And I told them we'll see them in court.
ZARROLI: Lee says some Diamondhead residents have accepted the mediation settlements because they needed money right away. Many of the Slingshot Group are retirees with comfortable incomes, who have both the resources and the time to keep pressing their claims. Lee himself is a former bank vice president. But even for these residents, the stakes in this battle are considerable. While the Lees and the Falstidges had flood insurance, it covered barely half the cost of rebuilding their homes. Many here say they want to start over in Diamondhead, but as these disputes drag on, they're unsure they'll ever be able to.
Jim Zarroli, NPR News, Gulf Port, Mississippi.
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