Senior Judge Senter from the Southern District of Mississippi continues to be on the front lines of the Katrina insurance coverage battles. In a case headed for trial, Judge Senter recently denied motions by both the insured and insurer attempting to establish estoppel on coverage issues. See Politz v. Nationwide Mut. Fire Ins. Co., No. 1:08CV18, 2009 U.S. Dist. LEXIS 39857 (S.D. Miss. May 11, 2009).
After Hurricane Katrina, the insured applied for and received a grant from the Mississippi Development Authority (MDA). Nationwide's motion argued this was an admission that at least some of the damage to the insured's home was caused by storm surge flooding. The court held that applying for and accepting the MDA grant was an admission by the insured that property was damaged by storm surge. But unlike the receipt of benefits from flood insurance, accepting the MDA grant did not indicate that the amount of flood damage was equivalent of the amount of the grant. Accepting the grant would only be admissible if the insured argued that storm surge flooding played no part in damaging the property.
The insured's motion sought to determine the payment of benefits by the insurer constituted an admission that the property sustained covered wind damage in the amount of the payment. The insurer's payment of $30,339.57 was accompanied by a letter stating, "We are enclosing a check for the amount of damages which we believe we owe at this time for damages caused during Hurricane Katrina." The insurer argued its payment was voluntary. Based on the insurer's letter, the court disagreed. Taking the insurer at its word, the payment was a best estimate of the amount owed the insured under the homeowners policy. If the insurer attempted at trial to assert it owed nothing under the policy, the letter would be admissible for credibility purposes.
Therefore, while Judge Senter did not find estoppel by either the insured or insurer, both acts were admissions which would be allowed into evidence should either party argue the damage was not caused by both wind and flood.
