Media Chip Away at Insurance's 'Rock Solid' Coverage
‘Nightly News’ continues to ignore contracts and costs following Katrina’s impact on Gulf.

By R. Warren Anderson
Free Market Project
October 11, 2005

     NBC again showed its ignorance about contracts, referring to them as “adding heartbreaking insult to injury” to victims of Katrina.

     Brian Williams opened NBC’s “Nightly News” October 10 report on insurance saying, “Thousands who have lost so much in the wake of Katrina have found that when it came time to collect on what they thought was their rock solid insurance coverage, the insurance companies told them no.” Williams failed to explain that the reason for this is federal flood insurance, available since 1968.

     Reporter Mark Potter started off his piece with a disgruntled insurance customer from Waveland, Miss., named Mark Buchanan. Potter explained that Buchanan’s home “might not be covered” because he wasn’t insured for flooding. But that wasn’t enough for Potter who pointed out “After all, he has a hurricane deductible.”

     The segment even showed Buchanan pointing to his hurricane deductible on a piece of paper claiming that meant he was covered for the storm. The story didn’t bother to show Buchanan’s actual policy, though policies typically make it quite clear that they don’t cover for flooding. Only the federal government does that.

     That hasn’t stopped Mississippi Attorney General Jim Hood, another of Potter’s interviews, who is suing the insurance companies. Hood called for the firms to “Write the check and quit fussing with those people that have nothing but a slab left.” Potter didn’t explain that Hood and left-wing power lawyer Dickie Scruggs are both suing the insurance companies, trying to overturn actual written contracts. The story also didn’t include what impact those suits would have on the Gulf area rebirth as companies flee an anti-business area.

     At least Potter interviewed Bill Davis of the Hurricane Insurance Information Center, who explained “People knew in this area, or should have reasonably known and been told that their standard homeowners’ policy did not cover storm surge or flooding.” That was the only airtime given to someone not critical of insurance companies in the nearly two and a half minute long story.

     The “Nightly News” story focused on the unwillingness of private insurance to payout for hurricane destruction. But as the Free Market Project reported, “insurance companies make sure to advertise up front, almost ad nauseum, that homeowners insurance does not cover flooding. Brochures, fact sheets, and other materials presented to consumers all underscore the necessity of buying separate flood coverage.”

     Private insurance companies are already paying out more than $60 billion, and if Hood and others win the lawsuits, insurance companies will have to pay out at least $15 billion more, as reported earlier.