WASHINGTON, DC – U.S. Senator Roger Wicker (R-Miss.) today introduced legislation that would help homeowners after a hurricane by removing the burden of determining flood and wind loss allocation from the policy holder and placing that burden on the insurance companies and the National Flood Insurance Program (NFIP.)
“This legislation is one of several steps needed to address some of the critical lessons learned from Hurricane Katrina,” said Wicker. “Following the devastation of Katrina, many Mississippians had to prove in court how much damage was caused by wind and how much was caused by water. Homeowners with the appropriate insurance policies should not have to fight in court for the coverage they purchased. Under my bill, if there is a dispute between the insurers responsible for paying the claim, the property owner would be compensated and the dispute would be resolved in arbitration.”
Wicker’s legislation comes as a result of an insurance roundtable he hosted in April 2010 to gather input from the community and interested stakeholders on how to fix some of the problems exposed following Hurricane Katrina. After the storm, many private insurance providers denied claims, leaving homeowners to battle the insurance companies in court to determine if the loss was caused by wind, water, or both. If the damage of the home was caused by wind, the private insurer or state wind pool would have to pay for the damage that was caused wind. If the damage was caused by water, the NFIP paid for the damage that was caused by water.
Wicker’s legislation, the Coordination of Wind and Flood Perils Act of 2010, would shift the burden of proof for flood and wind loss allocation from the policy holder and place it on the insurers. Regardless of how the claim is settled, the policy holder would be compensated as soon as possible. In the event that the involved parties cannot agree on the loss allocation – damage resulting from water versus damage resulting from wind- the dispute would go to arbitration for a binding decision.
“This bill is a starting point as more will need to be done in the months of ahead to reform NFIP and ensure that homeowners are protected during hurricanes,” added Wicker.
Wicker’s legislation will be referred to the Senate Banking Committee.