The Louisiana Court of Appeals has ruled for Hurricane Katrina policyholders and against Lafayette Insurance Co., finding that when a policy is ambiguous on flooding coverage, the customer should recover damages.
The ruling was issued last week in New Orleans in the case of Joseph Sher, who owned an apartment building that flooded during the 2005 storm. The decision upholds awards of $461,346 from a jury and a $58,308 judgment for court costs.
“We find the insurance policy ambiguous” and affirm the trial court’s decision, four of the five judges on the appeals panel said in a 53-page opinion. The fifth judge disagreed.
The case might have bearing on whether other insurers in the state, said Soren Gisleson, who represents hundreds of policyholders. He said the ruling, if upheld by the state Supreme Court, could become binding and upend a U.S. appeals court decision on the same issue that favors insurers.
Consumer attorneys argue flood exclusions in insurance policies are unclear and homeowners mistakenly think they are covered for most water damage.
“If the state Supreme Court decides against Lafayette, it will have a catastrophic affect on insurers at federal court,” he said. “We need the Louisiana Supreme Court to step up and resolve a host” of Katrina insurance issues, Gisleson said.
Howard Kaplan, an attorney for closely held Lafayette, said he will appeal to the state supreme court.
“This is an industry wide issue,” Kaplan said. The policy-language the court found unclear is standard for many insurers, he said. •
The case is Sher v. Lafayette Insurance Co., 2007ca0757, Fourth Circuit, State of Louisiana.
