Court Decision Deals Severe Blow to Hurricane Katrina Victims & Favors Deep Pockets of Insurance Companies
By Mike Stetzer
A recent federal court of appeals ruling is a major victory for insurance companies who insured Hurricane Katrina victims. These insurance companies will not be obligated to pay claims which could have cost them an estimated $1 billion.
When floodwaters breached the levees during and after the 2005 hurricane, the effect was devastating to homes and businesses in Louisiana. Many were completely destroyed or damaged beyond repair. Now the victims are being dealt another blow with the court of appeals ruling, finding out that their losses due to flooding were not covered by their insurance policies.
Due to specific clauses in the victims' insurance policies, thousands of homeowners and business owners trying to rebuild are without coverage and will not get assistance from the courts to force the insurance companies to pay. The court of appeals found that Louisiana law does not allow the courts to change the terms of the insurance contracts as they were written.
It seems reasonable, that the policies would only cover what they were written to cover, but were the policies clear about the coverage? The courts seem to disagree on that point.
The decision by the three-judge panel of the 5th U.S. Circuit Court of Appeals overturns the previous ruling by U.S. District Judge Stanwood Duval, Jr., who ruled against more than a dozen insurance companies who were defendants in the case, including Allstate and Travelers. In November, Judge Duval decided that the language which excluded coverage for water damage, in some of the policies, was unclear.
The U.S. District Judge found that the policies did not distinguish between acts of God and acts of man. Floods caused by rainfall would fall under acts of God, while the breaches in the levees would be classified as acts of man. He therefore ruled in favor of the plaintiffs in the case, ordering that the claims of the plaintiffs in the case be covered by the insurance companies.
The appeals panel disagreed. They found that the plaintiff's policies clearly excluded water damages caused by flooding, regardless of the cause. Even in the event that the plaintiffs could have proven that the breach of the levees was caused by some flaw in design or construction of the levees, their policies did not cover the flooding.
This case included around 40 plaintiffs who suffered losses from the flooding caused by Hurricane Katrina and the breech of the levees that followed.
There are many more cases pending in federal courts in Louisiana over the damage caused by hurricane Katrina. Thousands of claims have been filed against the Army Corps of Engineers for damages caused after the flood levees breached. There are dozens of cases pending in federal court in New Orleans, some with multiple plaintiffs, involving property owners who suffered damages and losses from Hurricane Katrina and have disputes with their insurance companies regarding their coverage.
It is sad to see victims, some who have lost everything, have to fight for the insurance companies to pay claims for coverage they believed they had. It is even sadder to see the courts side with the deep pocket insurance companies and deny coverage to policy holders who so desperately need the coverage that they thought they were paying for when the insurance premiums were paid.
But what else would you expect from insurance companies. Whether it's handling these Katrina cases or personal injury claims, insurance companies will typically put the bottom line ahead of everything else. In some cases, an injury lawyer might be able to help.