Rodent Regatta

Let me start by saying I’ve contributed to a charity that is providing help to victims of the hurricane. I also pay taxes which are clearly going to victims.

Now, there’s a possibility that insurance companies that I’ve invested (substantial) retirement funds into will be coerced or even ordered to pay sums of money they never agreed to pay. Insurance is a contract. Buyers and sellers of insurance know in advance what that contract covers.

Flood damage is caused by a flood. Wind damage is cause by the wind. Limits on liability exist. Exclusions exist. It is not a lack of compassion that makes me say, “stop there.” Here’s a quote from the Wall Street Journal (subscription required) that caught my eye:

Though home-insurance providers face little or no exposure to flood damage, some are calling for them to step in, given the widespread, costly scale of damage. Among them is Richard Scruggs, a well-known class-action attorney who made his name suing the tobacco and asbestos industries—and whose own beachfront house in Mississippi, which had flood insurance, was partly destroyed by Katrina.

Mr. Scruggs said he plans to urge Mississippi Attorney General Jim Hood to try to override flood-exclusion clauses in homeowners’ policies in that state in the interest of public policy, a move that could force insurers to pay many billions more toward rebuilding costs. Through a spokesman, Mr. Hood said: “I’m reviewing these contracts to determine if there are unconscionable provisions.”

Two more articles containing similar illogical notions can be found at:

• The New York Times
• The Washington Post