Judge in La. Rules in Favor of Insurance Companies in Flood Lawsuit

May 22, 2006

Insurance companies are not responsible for hurricane-related flood damage if homeowners carry coverage only for windstorms, a federal judge in Louisiana has ruled in a lawsuit over dispute claims stemming from Hurricane Rita, the Associated Press reported.

“You get what you pay for, and what they paid for was wind damage,” said U.S. District Judge Richard Haik in a ruling May 18.

But Haik also said: “I wish I didn’t think that. I am not a fan of insurance companies.”

Attorneys for homeowners had argued that under Louisiana law, insurance companies must pay total losses on a destroyed home when at least some of the damage was caused by a hazard covered by insurance, unless a disclaimer is given on the policy application.

The lawsuit was filed against State Farm and Louisiana Citizens Property Insurance on behalf of two families and sought class-action status. The insurance companies said the policies explicitly excluded flood damage

A decision will be made over the next week on whether to appeal the ruling, said plaintiff attorney Kenneth DeJean.

A similar issue is set for a hearing next month in New Orleans in a separate federal lawsuit filed over disputed Hurricane Katrina-related insurance claims.

Information from: The Advocate, www.theadvocate.com.

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