Although federal judges in New Orleans have ruled that the amount of money Hurricane Katrina victims can recover from their homeowners insurance policies is limited by the amount received from the National Flood Insurance Program (NFIP), federal judges in Lake Charles, Louisiana have ruled that Hurricane Rita victims can potentially collect the full value of both flood and wind policies. The rulings in Lake Charles could mean that Hurricane Rita victims could collect a total that exceeds the value of their homes. 

The court rulings on whether homeowners’ insurance policies and flood insurance policies should be considered together or independently could affect the amounts collected by thousands of homeowners. Attorneys consider the issue as almost as important as the valued policy law, which is intended to prevent insurers from overcharging, or the controversy over whether a man-made flood is excluded from homeowners insurance policies.

Attorneys following the hurricane litigation say they're aware of no appeals that would bring the split between the federal judges on opposite sides of the state before the 5th U.S. Circuit for resolution, an unusual situation. “You don’t see it often, but it does occasionally happen,” said Edward Sherman, a dean at Tulane Law School who teaches civil procedure and complex litigation.

Rulings Conflict on Insurance Payouts (New Orleans Times-Picayune 3/10/08)

March 27, 2008