Louisiana Attorney General Charles Foti has filed a class-action lawsuit against almost every major property/casualty casualty insurer in the state.  The suit claims that the insurers misused their homeowners policies’ flood exemptions to turn down the claims of about 150,000 hurricane victims and that these denials forced the state, through its Road Home program, to take on the financial burden.

The suit argues that insurers sold policies that did not explicitly exclude hurricane damage, storm surge or flooding from levee failures, and that they “knew or should have known that their policies as drafted provided coverage for natural as well as man-made or third-party fault occurrences associated with hurricanes.” Foti’s arguments have already been rejected by the 5th U.S. Circuit Court of Appeals, which ruled in August that regardless of the cause, a flood is a flood. Foti is pushing to have the case heard in state courts, which are typically more favorable to his position on the wind vs. flood debate than federal courts are.

September 11, 2007