Watered Down: Are Insurance Companies Getting Hosed in the Wind vs. Water Controversy?

In the aftermath of Hurricane Katrina, many Gulf Coast residents whose homes were damaged or destroyed turned to their insurance com-panies to provide compensation for their loss, only to find that their homeowners’ policy explicitly excluded losses due to flooding. Such policies often cover damage caused by wind and rain, but not from water; for many of the homes affected by Katrina, the damage was caused by a combination of wind and flooding. The author examines the so-called wind vs. water debate by focusing on two recent decisions from the Southern District of Mississippi in which insureds and insurance companies litigated the fact-intensive question of whether wind or water caused the damage to the insureds’ home. The author identifies three approaches to concurrent causation—the efficient proximate cause approach, the liberal approach, and the conservative approach—identifying the positive and negative aspects of each. Ultimately, the author concludes that the conservative approach should govern and the policies should be enforced as written. Otherwise, the author asserts that insurance companies will be forced to either raise premiums or to discontinue offering insurance in the Gulf Coast region.

The full text of this Note is available to download as a PDF.