What is the history between Prime Insurance Company and the State of Mississippi?
The lawsuit between the homeowners’ insurance company and the state dates back to 2018. At this time, hurricane Katrina had just passed over the U.S., damaging millions of peoples’ homes and land.
At that point, the insurance companies, among which was Prime, paid out millions of dollars in claims from the clients, while receiving way less in premiums. A major loss.
The state, however, felt that 12 different homeowners’ insurance companies did not abide by their policies and that the companies should pay millions to the state for the cost that it had to make to support the people.
From a 6 million dollar negotiation, down to 150 thousand, the CEO of Prime Holdings Insurance Services was not willing to pay as it believed it had done all it can for their policyholders.
After 5 years of fighting this battle, the District Court dismissed the lawsuit and Prime walked away holding their heads high, standing for they believe is right.
Why does the state sue homeowners’ insurance companies?
The state can sue homeowners’ insurance companies for different reasons. The main underlying reasons is to protect policyholders and enforce the state insurance laws.
Some common reasons for state lawsuits against homeowners’ insurance companies include:
- Failure to pay claims: Homeowners’ insurance companies are required to pay valid claims made by policyholders. If a company fails to do so, the state may sue to enforce the policyholder’s rights and ensure that the company meets its obligations.
- Unfair practices: The state may sue homeowners’ insurance companies if they engage in unfair or deceptive practices, such as misrepresenting policy terms, charging excessive premiums, or denying claims without proper justification.
- Fraud: If an insurance company engages in fraudulent activity, such as submitting false information or manipulating claims data, the state may sue to recover damages and hold the company accountable.
- Violations of state insurance laws: Homeowners’ insurance companies are required to comply with state insurance laws and regulations. If a company violates these laws, such as failing to obtain proper licensing or misrepresenting policy terms, the state may sue to enforce the law and protect consumers.
In this case, of course the state was trying to go after the insurance companies for unfair practices, as well as trying to get money back from the spending. Whether it was a self-preservation move is up to the reader to decide.
How does this affect my decisions for homeowners’ insurance companies?
It is important to know that the state has your best interest at heart when an insurance company is not practicing in the best interest of their policyholders’ interest.
By checking out ratings, like AM Best ratings, you can see how an insurance company has been treating their policyholders. The higher the rating, the more trusted the homeowners’ insurance.
This news is great for Prime, as they are the only one to stand their ground and prove that they have always had their policyholders’ best interest. Which is also why they are rated A (excellent) by AM Best.
Always look around and compare different policies, before deciding which fits the best to your personal situation.