Insurance Companies Win Major Katrina Ruling

Back in June, I reported that homeowners who lost homes in Katrina were waiting for a major ruling in their case against insurance companies.

U.S. District Judge Stanwood Duval Jr. had ruled in November that the insurance polices were ambiguous with regard to the language excluding water damage. He said the policies should have distinguished between floods caused by (a) a natural disaster, which would not be covered by most regular homeowners’ policies, or (b) a broken levee, which might be considered a man-made disaster and might be covered under regular policies. His decision was in favor of the policyholders.

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Judge Promises Quick Decision in Katrina Insurance Case

Carolyn King, one of the 5th U.S. Circuit Court of Appeals judges who will rule on the case involving New Orleans homeowners and insurance companies, has promised a quick ruling. Although such rulings usually take months, Judge King has acknowledged that tens of thousands of people could be affected by the case, so a quick ruling is important.

In November, U.S. District Judge Stanwood Duval ruled for policyholders who said that the insurance policy language excluding water damage from policies was ambiguous. He said that the policies didn’t distinguish between floods and rainfall that were acts of God, and other water damage caused by something like a broken levee. (I have a hard time seeing how a policyholder might think that a flood did not include water from a levee break. A flood is a flood, and flood damage was excluded.)

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