Miss. sues for insurers to cover flood damage.

Mississippi Attorney General Jim Hood has asked a court for a temporary restraining order that seeks to have the flood exclusions in homeowners insurance policies declared null and void. The suit, filed in the Chancery Court of Hinds County, Miss., First Judicial District, comes in the wake of Hurricane Katrina.

At issue in Hood's suit--and in other lawsuits filed by attorney Richard Scruggs in Mississippi and by the McKernan Law Firm in the 19th Judicial District Court in Baton Rouge, La.,--is whether insurers can exclude from coverage flood damage caused by Katrina.

Insurance trade groups said it's a well-known fact that homeowners insurance policies exclude flood damage. They have done so for nearly 40 years, since the creation of the federal National Flood Insurance Program in 1968. Both the Property Casualty Insurers Association of America and the American Insurance Association pointed out insurance policies are legal contracts.

However, Hood's suit--filed against Mississippi Farm Bureau insurance, State Farm, Allstate, United Services Automobile Association and Nationwide Mutual Insurance Co.--seeks to declare the policy contracts "void and unenforceable." The suit claims insurers are "attempting to exclude coverage for hurricane loss ... resulting from water, whether or not driven by wind."

Standing in the way of Hood's argument are several established facts, said Stephen A. Cozen, the founder and Chairman of Cozen O'Connor.

National flood insurance was established to thwart such a crisis. "We need to take a look at how we got to where we are," Cozen said. In addition to easing the burden for insurance companies that believed it to be actuarially unsound to include the risk of flood in standard insurance policies, the NFIP also assisted citizens who otherwise wouldn't be able to obtain the coverage.