A New Orleans home owner whose home was destroyed during Hurricane Katrina has won an appeal against the home owner’s insurance company that denied his claim.  By ruling against Lafayette Insurance Company, the Louisiana 4th Circuit Court of Appeals has given fresh hope to the thousands of Katrina victims who say their insurance companies acted in <"https://www.yourlawyer.com/topics/overview/bad_faith_insurance">bad faith when they denied claims.
Lafayette had appealed an earlier state court decision that said the insurance company had to pay for damage to an apartment building owned by an Orleans Parish man that was caused by flooding brought on by levy failure following Hurricane Katrina. In addition to being a source of income, the building also served as the man’s home. Lafayette paid the policyholder about $2,700 for wind damage, but he estimates his home sustained a total of $223,488 in damage that should be covered. Lafayette maintained that because that damage was caused by flooding, it did not have to cover the loss.
In March, a jury awarded the policyholder $369,077 for property damage and lost rent, plus $184,538 in penalties. The judge presiding over the case also ordered Lafayette to pay $258,728 in attorney fees. Lafayette appealed the ruling to the 4th Circuit.  The appeals court agreed with the original ruling that Lafayette Insurance Co.’s policy failed to exclude all forms of flooding because its language was ambiguous. Because of that, Lafayette is required to pay for flooding from the destroyed levies, the court ruled. However the appeals court did reverse the ruling on attorney fees.
In writing its majority opinion, the court wrote that “Lafayette failed to specifically exclude all floods because of the ambiguity contained within the water exclusion.” The Louisiana appeals court’s ruling contradicts one made by the US 5th Circuit, which found that insurance companies did not have to cover damage caused by failed levies.
The policyholder’s attorney praised the 4th Circuit’s decision, saying it would go a long way towards rebuilding New Orleans.  But the homeowner will likely have to face down Lafayette once more, as it is expected the insurance company will appeal to the Louisiana State Supreme Court.
Thousands of homes were reduced to rubble by wind and the massive storm surge created by Hurricane Katrina in 2005. Many Gulf Coast homeowners have accused their insurance companies of using bad faith tactics to try to avoid paying claims. Some insurance companies initially made offers to settle <"https://www.yourlawyer.com/topics/overview/Hurricane_Claims">Hurricane Katrina claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.
Hurricane Katrina caused more than $80 billion in damage along the Gulf Coast, making it the single most expensive natural disaster in US history. The tactics used by insurance companies have also led to more insurance lawsuits than any other disaster.
