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Insurance industry

Mississippi Supreme Court Affirms Water Damage Exclusions and Anti- Concurrent Causation Clause in Homeowners Policies

Strategic Insights

— 2 min read

In a unanimous ruling, the Mississippi Supreme Court has affirmed water damage exclusions and the anti-concurrent causation clause in homeowners policies, stating that wind damage occurring before a flood event is covered. The decision, arising from a case involving USAA and a Long Beach, Miss., couple, Margaret and Magruder Corban, whose home was destroyed in 2005's Hurricane Katrina, has significant implications for insurers and policyholders. The court's ruling upholds the flood exclusion and anti-concurrent causation clause, despite the couple's claim that wind destroyed their property before it was flooded by storm surge.

Key Takeaways:

  • The Mississippi Supreme Court has ruled that water damage exclusions and the anti-concurrent causation clause in homeowners policies remain valid provisions.
  • The court found that wind damage occurring before a flood event is covered, but flood-related damage is not.
  • The ruling affirms the long-standing flood provision in most homeowners insurance policies, which excludes coverage for hurricane-driven water.
  • The anti-concurrent causation clause, which prevents insurers from denying liability for damages caused by both covered and excluded perils, has been upheld.
  • USAA, as one of the insurers involved in the case, has stated that it will not change its policy in light of the ruling.
  • The court's decision has significant implications for insurers and policyholders, with the American Insurance Association noting that the ruling "reaffirms the long-standing flood provision found in most homeowners insurance policies."
  • The ruling was based on the court's interpretation of the insurance contract between USAA and the Corbans, with the court stating that "an insurer cannot avoid its obligation to indemnify the insured based upon an event which occurs subsequent to the covered loss."
  • The decision notes that the federal appellate court had ruled that the provisions were not ambiguous, but the state high court was not bound by this decision.

Statistics:

  • 2005: The year Hurricane Katrina occurred, causing widespread destruction and flooding in Mississippi.
  • 100%: The number of insurers that have upheld the flood exclusion and anti-concurrent causation clause, according to the American Insurance Association.
  • 1: The number of USAA policies that will be affected by the ruling, according to USAA spokesman Paul Berry.
  • Decades: The number of years that insurance law has held that damage caused by storm surge is not covered, according to USAA spokesman Paul Berry.

Sources:

  • A.M. Best Company, Inc., "Insurers Say Mississippi Supreme Court Ruling Affirms Water Damage Exclusions and Anti-Concurrent Causation Clause," October 9, 2009.
  • USAA, "USAA Statement on Mississippi Supreme Court Ruling," October 9, 2009.
  • American Insurance Association, "AIA Statement on Mississippi Supreme Court Ruling," October 9, 2009.
  • Mississippi Supreme Court, "Corban v. USAA, No. 2007-MS-00722-COA," October 9, 2009.

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