Irvine, CA– One year after Hurricane Katrina left the Gulf Coast in ruins, many residents have started to rebuild their homes and their lives, relying in many cases on payouts from their home-insurance policies.

Yet despite paying out an unprecedented $56 billion in claims to victims of Hurricane Katrina, U.S. insurance companies have been smeared as “greedy” and “cold-hearted” for not doing more. Some are even being sued by their customers for refusing to cover flood damage. This, even though the companies never sold flood insurance, which is only available through the federally funded National Flood Insurance Program.

“This is as absurd as hiring someone to mow your lawn and suing him because he did not also paint your house,” said Yaron Brook, executive director of the Ayn Rand Institute. “Insurance companies are responsible for fulfilling the terms of their contracts–not for satisfying their customers’ every financial need.

“Insurance companies should not be demonized for insisting on the terms of their contracts. The fact that some Gulf Coast residents did not have flood insurance means that they must bear the costs of the flood damage or else rely on private charity. Their misfortune does not give them the right to impose those costs on anyone else.”

Voice of Capitalism

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