Mississippi Attorney General Jim Hood's lawsuit, filed after Hurricane Katrina to compel insurers to pay for what carriers argue are excluded flood damage claims, remains mired in a jurisdictional dispute.
Shortly after Mr. Hood filed the suit in state court on Sept. 15, insurers moved to have the suit heard in U.S. District Court in Jackson, Miss.
"Since one of the main issues involved was the National Flood Insurance Program, we felt the federal venue was appropriate," said State Farm spokesman Phil Supple.
In addition to State Farm, the suit names Allstate, Nationwide, USAA and the now defunct Mississippi Farm Bureau as defendants.
Federal Judge Tom S. Lee is hearing the suit, and there is little indication when he will rule on the jurisdictional dispute.
Jacob Ray, spokesman for Mr. Hood, said since there are no federal issues of law involved, the state court remains the most appropriate jurisdiction.
In the suit first filed in Chancery Court of Hinds County, Miss., first judicial district, the attorney general alleged that certain contract provisions seeking to exclude some water damage, whether or not driven by wind, are unenforceable.
The insurance industry maintains that policy language excluding flood damage covers rising waters, even if they were driven by the hurricane.
With more than half of the Gulf Coast homeowners whose homes were severely damaged by flood having no flood coverage or very little coverage, the suit has become part of the national debate about natural catastrophe risk coverage.
Earlier this week, the National Association of Insurance Commissioners debated a plan that would in essence eliminate the flood exclusion in favor of a scaled down national flood program and homeowners policies reflecting the added risk.
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