Flood damage caused by Hurricane Katrina may be covered under those insurance policies that do not specifically exclude from coverage damage caused by negligence, according to a federal court opinion handed down Monday. Judge Stanwood R. Duval Jr. of the US Eastern District of New Orleans rejected a bid by insurers to dismiss plantiffs' actions in a set of consolidated cases.
Applying the Louisiana Civil Code, Duval ruled that insurance policies should be strictly construed against insurers after finding that much of the flood damage resulting from the hurricane was caused by levee failures. He concluded that the term policy "flood" refers only to naturally-caused flooding unless the policy specifically defines the term to cover flooding caused by man as well. He nonetheless noted that certain policies, including those written by State Farm and Hartford Insurance Company, categorically excluded all coverage for flood damage and should not be construed to cover any flood damage. The cases against the insurers will now go forward pending review of Duval's ruling by the US Fifth Circuit Court of Appeals.
In the first Katrina-related insurance lawsuit to go to trial, a federal judge in Mississippi ruled in August that Nationwide Insurance was not obligated to cover a policyholder's claims for water damage caused by the hurricane.