Coastal Hardware and Rental Co. has been fighting almost five years now to have its Katrina wind damage covered under a policy issued by Underwriters at Lloyds.
The case was headed to trial in Hancock County Circuit Court, after Judge Lisa Dodson issued a ruling that denied Lloyd's motion to dismiss the case. The British insurer claimed its policy excluded wind coverage.
Dodson pointed out the policy had not arrived when Katrina hit. Under that circumstance, the policyholder rightly relied on a binder issued before the policy was mailed. Under exclusions, the binder listed only earthquake and mold.
Further, an e-mail from Lloyds to the agent selling the policy said, "Please sell it based on the fact it is now All Risk coverage including Theft excluding Flood and Earthquake . . . "
Coastal canceled a separate policy with wind coverage based on assurances,the lawsuit says, that wind would be included in the Lloyd's renewal policy.
Dodson did not buy Lloyd's argument that the policy superceded the binder. First, she said, the policy never arrived. Second, it included ambiguous language. Where ambiguity exists in an insurance policy, the benefit of the doubt goes to the policyholder.
A jury must now determine how much damage Coastal suffered from the storm. The company had $600,000 in structural coverage, $600,000 in contents coverage and $200,000 for business interruption.
Attorneys for Coastal, Tim Matusheski of Hattiesburg and former U.S. Attorney Brad Pigott of Jackson, also are asking that Lloyd's pay punitive damages, but Dodson will decide only after actual damages are determined whether punitive damages should be considered.