Ideoblog

The Pirates of the Gulf

Lawyer Dickie Scruggs and Mississippi AG Jim “Eliot” Hood are trying to get insurers to cover floods from the recent hurricanes, even though they don’t.  The insurance contracts say no flood damage.  As in No. Flood. Damage. That means, even if it’s caused by a hurricane. Maybe if the damage is caused by wind. Flood protection is offered by the government, not private companies. 

But for these lawyers, contract rules are only “guidelines.”  Sort of like the Pirate’s Code in Pirates of the Caribbean. And you have to be a pirate for the Pirate’s Code to apply.

A W$J editorial today points out the mischief that would be done if courts actually bought this argument, apart from the catastrophic liabilities for the insurance industry:

Insurance companies that survived would have to assume that flood liabilities are now theirs to pay, regardless of the contracts they write. They'd then have to charge everyone in the region higher premiums -- by one estimate, as much as $500 a year -- to cover this flood risk.

But it’s actually worse than that, because nobody’s safe if courts don’t enforce contracts.  How could the insurance industry ever be sure it was excluding a risk if can't enforce this clearest exclusion of all?  How could any company ever be sure it was limiting the scope of any promise?

Welcome aboard the Black Pearl, Miss Turner.

Tom Kirkendall, reporting from Houston

I have often relayed the valuable reports from Tom Kirkendall on the Houston scene, particularly including the Enron backwash in the local courts.  Then Tom reported on Houston's efforts to aid Katrina victims -- efforts in which he was an active participant. Now Tom is reporting on Hurricane Rita.  Let's hope Houston, and Tom, can weather this one.