Big Insurers Win Ruling On Katrina Levee Break - washingtonpost.com
I haven't read this opinion yet, but I am thinking it has implications beyond the Katrina losses. HOAs and condo associations with property damage caused by water and maybe other causes could be affected. The insurance industry rewrote its first-party property policies long ago to avoid exposure for major water and earth movement claims. Those were always excluded, but they ended up paying anyway if there was a covered peril, such as human negligence, that contributed to the loss concurrently with an excluded peril, like floods. So the trick for claimants' attorneys has always been to find the negligence and then demand payment, notwithstanding the exclusion, and to sue for insurance bad faith if you don't get paid for the loss. This decision says the policy exclusions are not ambiguous and coverage for floods is excluded, regardless of whether the flood was an "act of God" (although why people blame God for this I'll never understand) or the result of human negligence, such as badly constructed levees that breach. This is an appellate court opinion in a huge case with a whole lot of insurance companies and will be cited as precedent.


Hurricane Katrina victims whose homes and businesses were destroyed after floodwaters breached levees in the 2005 storm cannot recover money from their insurance companies for the damage, a federal appeals court ruled yesterday...The appeals panel concluded, however, 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."