Winter Newsletter 2007

New Orleans Judge Rules In Favor Of Hurricane Victims: Vague Insurance Policies Insufficient To Deny Policyholder’s Claims

Nearly a year and half ago, Hurricane Katrina ravaged the Gulf Coast, leaving many of the area’s residents homeless and awaiting assistance—from both the government and their private insurers. In a decision that could clear the way for these policyholders finally to receive what they are owed under contract, a federal judge in New Orleans ruled that vague homeowners policies do not shield the insurance industry from its obligations to pay fair and just claims. Citing ambiguous language in many of the policies, Judge Stanwood R. Duval, Jr. said that flooding due to "man-made" acts could be covered.

The policyholders in the New Orleans case contend that the levees would not have failed had it not been for the negligent maintenance of a clearly inadequate system—resulting in a man-made flood. The insurance industry covers other types of man-made water damage (broken pipes or above-ground swimming pools), but has so far refused to properly compensate many policyholders for this man-made water damage.

Victims of the 2005 hurricane season have taken matters into their own hands buy turning to the last resort for Americans to find justice—the civil justice system. Such business practices as "bad faith" cannot be prosecuted criminally, so it is up the civil justice system to bring them to light, and force wrongdoers to adequately compensate victims for their crippling financial burdens and suffering.