Mississippi's attorney general, Jim Hood, has filed suit against five insurance companies. At issue is whether those insurance companies are failing to fulfill their obligations to flood victims.
Marion Williams' insurance adjuster looked at his home's damage and said it's the result of a flood, not a hurricane.
"It was the hurricane. Heavy winds pushed the water in," said Williams.
Williams has no flood insurance. Neither does his neighbor, 82-year-old Bill Vierling. Still waiting for his insurance adjuster, Vierling fears he'll also hear the damage came from a flood.
"Baloney. All the way through here from the beach, all the way down the line, there's evidence from low pressure, wind was picking things up," said Vierling. "A flood didn't do that."
In the lawsuit, Hood charges insurance companies with illegally trying to get out of paying compensation to Katrina's victims.
"If we don't stop the insurance companies, the Gulf Coast will go bankrupt," said Hood.
The insurance companies in their standard policies exclude damage resulting from water, even if that water is driven by wind.
The companies say homeowners have to take out separate flood insurance offered by FEMA, but few people did that here because this area is not designated as a flood zone.
Named in the lawsuit are State Farm, Nationwide, Allstate and other insurers.
State Farm said, "The attorney general's action threatens to undermine the insurance industry's financial stability."
Nationwide said it was "deeply disappointed" with the attorney general's charges.
Allstate said, "It's unfortunate that a lawsuit has been filed so early in the recovery process."
The industry's trade group says the policies are clear.
"The insurance industry did not charge premiums for flooding, and flooding is not covered under a standard homeowner's policy," said Jeanne Salvatore of the Insurance Information Institute.
The Red Cross estimates Katrina destroyed more than one third of the homes along Mississippi's Gulf Coast. Residents like Bill Vierling say they hope the state's lawsuit will get insurance companies to soften their stance. He says his only other hope is a bailout from the federal government.