Saturday, August 04, 2007

Legal Briefs: Insurer Katrina Victory; White Spaces

Sensible Victory For Insurers On Katrina Flood Claims

Insurers won a major victory late this week in litigation over Hurricane Katrina claims--the Fifth Circuit Court of Appeals ruled that homeowners insurance policies don't cover residential property damage claims caused by flooding. Instead, flood damage is covered by a separate federal program. (See "Big Insurers Win Ruling On Katrina Levee Break")

The homeowners, along with New Orleans' Xavier University, had argued that the damage to their property was caused by "negligence," as in the negligent design of levees that failed during Hurricane Katrina. Nice try, said the Fifth Circuit, but flooding is flooding.

This is a good decision for you and us. Virtually all homeowners policies exclude flood damage. By the same token, homeowners in flood zones can obtain flood insurance under a federal program that we and you ALREADY subsidize.

Yes, flood insurance is pretty expensive. But there's an easy way to avoid that cost: don't live in a flood zone. Most of New Orleans is a flood zone and, by golly, the residents there should have a pretty good idea--from past floods--that sooner or later they're likely to get inundated. So, buy flood insurance. (Or don't live below sea level.)

For the rest of us, a contrary ruling from the court would've meant we have to subsidize, via higher rates, the folks who gambled--didn't buy flood insurance--and lost. Of course, we're still doing a lot of subsidization with the billions in tax money being spent--much of it misspent--down in the bayou to rebuild in the same flood prone area with the same inadequate levees.

White Spaces

In other legal news, the Federal Communications Commission said this week that testing it conducted of mobile electronic devices that tech companies wanted to unleash into the "white spaces" of telecom spectrum being vacated by over the air television would interfere with digital television and wireless microphones.

Why are we telling you this? Because it is a victory for Mrs. Curmudgeon, who has been representing a wireless microphone manufacturer in the battle over allocation of the white space spectrum. (See our prior post: "The Day The Music Died")

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