Fifth Circuit to hold hearing on Katrina Canal Breaches appeal

You remember the decision by Judge Duval in federal court in Louisiana last year, the one where he said flood exclusion language was ambiguous in a number of insurers’ policies?  You may recall that the judge felt the language was ambiguous because "flood" normally refers to a pure act of nature, rather than a process involving man, such as the overtopping of man-made levees in New Orleans.

In my opinion, this reasoning is reductionist and oversimplistic —  I mean no offense to Judge Duval, I’m just arguing a philosophical point.  Why do I say this? Two reasons. First, because all flooding that would concern an insurance policy involves man — after all, who is being flooded? Correct, people are being flooded. If the people were not there, no claim would exist. Second, the fact that the people are there means that almost in every case of flooding some kind of human intervention in the environment has facilitated the conditions that result in flooding. Sometimes it is basic: people who live near the Gulf Coast or along a river bank stand a greater chance of being flooded. Sometimes it is somewhat more complicated: river channels and even coastlines are altered by the conscious designs or engineering feats of man, or sometimes unwittingly by the actions of people (for example, flood control on the Mississippi/Missouri has resulted in less silt being deposited in the Gulf of Mexico and erosion of the Mississippi River Delta).  I don’t think it is a productive exercise to try to draw a distinction between "man-made" and "natural" flooding.  Plus, the way policies are almost always interpreted, if for some reason a water tower tipped over and flooded your basement, that is every bit as much a flood as a so-called natural flood.

In any event, here’s a story by Mike Kunzelman of the Associated Press on the hearing.  Here is a post I did last year on this case.



Filed under First Party Insurance

2 Responses to Fifth Circuit to hold hearing on Katrina Canal Breaches appeal

  1. David,
    I have a question for you, and please bear with me because I am not an attorney, and I have not read the policies in question in Louisiana. However, in my market, virtually every Homeowner’s policy sold is some form of a “named peril” policy. They usually provide “broad” coverage, but they are still essentially “named peril” policies vs. “all-risk” policies.
    If this is the case in Louisiana as well (which I don’t know), to me the exclusion would be irrelevent. If flood, whether natural or otherwise, is not listed as a “named-peril”, then how can coverage be provided? A “named-peril” contract does not provide coverage unless the peril is named in the list of coverges provided.
    The only answer I can see that would nullify this problem would be if Louisiana requires some form of “all-risk” policy in which coverage is provided unless excluded, but I would be surprised to find this.
    Again, I don’t know enough about Louisiana policies to know the answer to this, and you are probably aware of other factors related to Insurance Case Law that might shed some light on this for me. My point would simply be that if the policy didn’t initially provide for some flood coverage, that the wording of the exclusion would be irrelevent as far as arguing “natural vs. man-made”.

  2. Layne, if you follow the link to my post last year and then click on the link there to a pdf of Judge Duval’s decision, the opinion says that the homeowners policies at issue were all-risk policies. So under these policies, as you know, perils are covered unless specifically excluded.