A U.S. federal judge denied Motions to Dismiss claims based on the water damage caused by a canal levee breach. After reading the 85 page opinion, news reports appear to have incorrectly concluded that the Judge "ruled that insurance companies should pay for widespread water damage that ensued in the wake of Katrina."
Judge Stanwood Duval's ruling does put insurers at risk to pay more than the $41 billion they have already paid to storm victims.
Judge Duval's decision centered on the distinction between flooding caused by high winds and heavy rains and flooding caused by human error. Much of the destruction in New Orleans in the wake of Hurricane Katrina in August 2005 was a result of levee failures.
He said the language in the insurance policies on flood coverage was ambiguous because it did not "clearly exclude man-made" flood disasters. Because the insurers had provided the wording for the policies, he said he felt "constrained to interpret it against the insurers." Most of the arguments set forth by the Plaintiffs suggest that 'water intrusion' is different than flooding. The court did an exemplary job of wading through the many definitions of the term "flood," including one that refers to rising and overflowing as opposed to exiting through a breach.
For more go here.
The 85 page PDF ruling can be found here.
The E.D. of LA Court page can be found here.