La. Supreme Court Upholds Flood Exclusion in Insurance Policy

Stating that the flood exclusion in an insurance policy sold by Lafayette Insurance Company to a New Orleans area policyholder is unambiguous, the Louisiana Supreme Court has reversed, in part, a previous ruling by a state appeals court in a post-Katrina wind versus flood case.

In Joseph Sher v. Lafayette Insurance Company, the state’s 4th Circuit Court of Appeal previously found that Lafayette should have paid for Hurricane Katrina damage to a Sher’s property because it was unclear what types of flood damage were excluded from coverage by its homeowner policies, according to a report by the Associated Press. The Appeals Court agreed with a state judge’s ruling that Lafayette Insurance Co.’s policy failed to exclude all forms of flooding because its language was ambiguous.

But in it’s April 8 ruling, the state Supreme Court said it agreed with Lafayette’s argument that the appeal’s court “erred in affirming the trial court’s granting of plaintiff’s partial motion for summary judgment by determining that the meaning of the word ‘flood,’ as used in the policy, was ambiguous.”

Lafayette originally paid Sher about $2,700 for wind damage but Sher maintained that his property sustained a total of $223,488 in covered damages. A jury in March 2007 awarded Sher $369,077 for property damage and lost rent, plus $184,538 in penalties. The judge in the case ordered Lafayette to pay $258,728 in attorney fees.

The 4th Circuit amended the awards to $461,346 for property damage and lost rent but said the trial court erred in awarding attorney’s fees.

The Supreme Court amended the final award to the plaintiff to $247,001.10. Interest on damages run from date of judicial demand and interest on penalties run from date of the trial court judgment, the high court said.