Courts Hand Victory To Insurance Companies, More Sorrow To Katrina Victims

Home insurance companies are cheering after they were told by Judge Carolyn King that they would not have to pay for flood damage to their clients homes. Those homes were destroyed in the aftermath of Hurricane Katrina. The lawsuit was filed by over 40 people and institutions that were not granted money to help rebuild their lives nearly two years after the calamity occurred. The impact of the decision could affect thousands.

From MSNBC:

The decision overturns a ruling by U.S. District Judge Stanwood Duval Jr., who in November sided with policyholders arguing that language excluding water damage from some of their insurance policies was ambiguous.

Duval said the policies did not distinguish between floods caused by an act of God — such as excessive rainfall — and floods caused by an act of man, which would include the levee breaches following Katrina’s landfall.

But the appeals panel concluded that “even if the plaintiffs can prove that the levees were negligently designed, constructed, or maintained and that the breaches were due to this negligence, the flood exclusions in the plaintiffs’ policies unambiguously preclude their recovery.”

Basically this is a nice win for the bottom lines at companies like All State (you aren't in good hands) and Traveler's Insurance (that umbrella doesn't cover you). The losers now number in the thousands, with no money to recuperate from their unlivable homes, it will be next to be impossible to rebuild.