Insured Loses Katrina Claim

The Louisiana Supreme Court has ruled that a flood exclusion in an “all-risk” policy barred a claim by the owner of an apartment building damaged by flood waters during Hurricane Katrina.
The owner lived in the five-unit building when four feet of water entered the basement during the hurricane. He had a commercial “all-risk” policy and submitted a claim for the damage. An insurer’s inspector claimed most of the damage was due to poor maintenance and flooding.
The insurer paid only $230 on the claim because the policy excluded coverage for damage caused by various forms of water, including “flood.” But the policy did not specifically define the word “flood.”
The owner sued claiming the policy’s failure to distinguish between naturally-caused flooding and flooding resulting from the failure of man-made structures like those protecting New Orleans rendered the exclusion too ambiguous to enforce.
But the court rejected that argument.