Joseph Treaster in the NY Times reports: Mr. Lott, a Republican and former majority leader, is one of thousands of homeowners on the Gulf Coast who have been fighting with their insurers over payments for damage in Hurricane Katrina. In an interview yesterday, he said he was angry about the insurers’ “insensitivity and outright meanness” in rejecting many homeowners’ claims.
He said he inserted a provision into legislation, signed by President Bush last week, directing the Department of Homeland Security to investigate potential fraud by the insurance industry. Mr. Lott said he was also drafting legislation to challenge the industry’s exemptions from antitrust laws and had asked his staff to investigate the industry’s tax rates.
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Mr. Lott said he was also planning to introduce legislation requiring the insurers to include in their policies a prominent listing in plain English of what they refuse to cover. He said home insurance policies contained “a bunch of subterfuges” difficult for laymen or lawyers to comprehend. “Don’t tell me they don’t do it on purpose,” Mr. Lott said.
Insurance is mainly regulated by the states. But the federal government has authority on antitrust and tax issues. The insurers have been exempted from some antitrust laws since the 1940’s. These exemptions permit them to share industrywide information on claims costs and project future costs.
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State Farm and other insurers promise to pay for wind damage in hurricanes but they say their policies do not pay for flood damage. Federal flood insurance pays up to $250,000 in damage to a home and up to $100,000 for furnishings and clothing.
Mr. Lott and several thousand other Mississippi homeowners are suing State Farm and other insurers, arguing that the winds of Katrina pushed floodwaters across the beaches and that the policies they bought that promise coverage against wind damage should be honored. via Steve Gilliard
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