Hurricane Katrina victims whose homes and businesses were destroyed when floodwaters breached levees in the 2005 storm cannot recover money from their insurance companies for the damages, a federal appeals court ruled Thursday.
The case could affect thousands of rebuilding residents and business owners in Louisiana. Robert Hartwig, chief economist at the industry-funded Insurance Information Institute in New York, said in June that a ruling against the industry could have cost insurers $1 billion.[..]
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."
God forbid the insurance agencies have to pay out for these people with devastating losses.