A lot rides on how 'flood' defined
La. justices hear arguments on Katrina's waters
as posted at www.nola.com
By David Hammer
February 27, 2008
Louisiana Supreme Court justices aren't linguists, but their definition of one solitary word -- "flood" -- will decide the fate of thousands of insurance claims worth millions of dollars to New Orleans area homeowners.
The state's high court heard its first Hurricane Katrina insurance payment case Tuesday, and the crux of the policyholder's argument -- one that mirrors many others still trudging through the lower state courts and the federal court system -- is that the inundation of 80 percent of New Orleans after the 2005 storm was not a "flood."
Homeowners have been arguing for nearly two years that the failure of federal flood control structures after winds and rain had subsided was a man-made disaster, something other than the traditional definition of the word "flood." But the insurance industry is counting on Webster's, Black's and any other dictionary to convince the justices that the cause of the flooding doesn't change the fact that it's a flood.
If the state court follows the 5th U.S. Circuit Court of Appeals' ruling in a similar case last year, "a flood is a flood" and insurance companies coast to coast will be able to rest easy because they generally are not responsible for covering flood damage. If there is any doubt about the word's meaning, however, the court will have to rule in favor of the policyholders, and the Louisiana Supreme Court trumps the federal courts on such questions of state law.
The case came before the court about an hour after the justices heard their first Hurricane Rita insurance case, another one that could have wide-reaching effect on both hurricane victims and the insurance industry. In that case, a western Louisiana couple argued that a 108-year-old state law allows anyone whose home is totally destroyed by a combination of forces to collect full payment from homeowner's insurance, even if an uncovered peril like flood causes much of the damage.
In both cases, the insurance industry has said unfavorable rulings could lead to higher premiums and an exodus of companies from the Louisiana market. Homeowners' advocates say that's a tactic meant to scare the justices, who are elected.
Flood is expressly excluded from coverage under homeowner's insurance policies, and there is a federally subsidized flood insurance program to pay for damage caused by floods. But Joseph Sher, a 92-year-old Holocaust survivor, collected an undisclosed amount from his flood insurance policy and now claims his insurer, Lafayette Insurance Co., also should have paid him for the water damage to his Uptown fourplex.
Sher's homeowner's insurance policy, like the vast majority of all-risk policies, excluded certain water events from its coverage, listing "flood" along with "tidal waves" and other "acts of God." But Lafayette did not take advantage of an industrywide policy form that clarified the meaning of "flood" in 2004, wording that was approved by Louisiana Insurance Commissioner Jim Donelon. Sher's attorney, Jim Garner, said that proved the term's ambiguity.
Lafayette's attorneys, meanwhile, argued that Garner was trying to overcomplicate the issue, and the court should simply follow the "generally prevailing meaning" of the word "flood." They said all that matters is that the average person on the street would call what happened in New Orleans after Katrina a flood.
"The question really is a simple one: whether the massive inundation of 80 percent of New Orleans during Hurricane Katrina was a flood, and the answer is clearly 'yes,' " said Ralph Hubbard.
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
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