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The legal debate over the meaning of 'flood'
Posted on November 28, 2007
Daily Real Estate News | November 26, 2007
Courts, Insurers Argue Over Meaning of 'Flood'
Insurance companies and courts in Texas and Louisiana continue to wrangle over whether insurers wrongly denied payments to victims of Hurricane Katrina.
In the latest decision, the Louisiana 4th Circuit Court of Appeal ruled in favor of New Orleans’ resident Joseph Sher, a 91-year-old Holocaust survivor whose insurer, Lafayette Insurance Co., denied most of his damage claims by saying they were caused by a "flood," and therefore not covered by his hazard policy.
The appeals court voted 3-2 that the language in the insurance policy was ambiguous, leaving open the possibility that the standard insurance contract definition of flooding refers to natural disaster, while the levee failure was a manmade event that should have been covered by most homeowners policies.
In August, three Texas judges on the U.S. 5th Circuit Court of Appeals ruled the opposite way in a different case. That panel was far more explicit in saying a flood is a flood, regardless of what causes it.
Both decisions will be appealed, potentially going as far as the U.S. Supreme Court, leaving the decision open to another ambiguity. Louisiana’s Attorney General Charles Foti argues that the state courts, not the federal, have the right to decide insurance questions covered by state law.
Source: Times-Picayune, David Hammer (11/21/2007)
In the latest decision, the Louisiana 4th Circuit Court of Appeal ruled in favor of New Orleans’ resident Joseph Sher, a 91-year-old Holocaust survivor whose insurer, Lafayette Insurance Co., denied most of his damage claims by saying they were caused by a "flood," and therefore not covered by his hazard policy.
The appeals court voted 3-2 that the language in the insurance policy was ambiguous, leaving open the possibility that the standard insurance contract definition of flooding refers to natural disaster, while the levee failure was a manmade event that should have been covered by most homeowners policies.
In August, three Texas judges on the U.S. 5th Circuit Court of Appeals ruled the opposite way in a different case. That panel was far more explicit in saying a flood is a flood, regardless of what causes it.
Both decisions will be appealed, potentially going as far as the U.S. Supreme Court, leaving the decision open to another ambiguity. Louisiana’s Attorney General Charles Foti argues that the state courts, not the federal, have the right to decide insurance questions covered by state law.
Source: Times-Picayune, David Hammer (11/21/2007)
