Seen on the AP wire:
Hurricane Katrina victims whose homes and businesses were destroyed when floodwaters breached levees in the 2005 storm cannot recover money from their insurance companies for the damages, a federal appeals court ruled Thursday.[...]
The decision overturns a ruling by U.S. District Judge Stanwood Duval Jr., who in November sided with policyholders arguing that language excluding water damage from some of their insurance policies was ambiguous.
Duval said the policies did not distinguish between floods caused by an act of God — such as excessive rainfall — and floods caused by an act of man, which would include the levee breaches following Katrina’s landfall.
But the appeals panel concluded that “even if the plaintiffs can prove that the levees were negligently designed, constructed, or maintained and that the breaches were due to this negligence, the flood exclusions in the plaintiffs’ policies unambiguously preclude their recovery.”
This obviously sucks for the victims of the Great Flood of New Orleans, but it returns some measure of sanity to the interpretation of insurance contracts.
That flood was clearly known to be an excluded peril is one of the reasons that the federal government allocated so much money to help with reconstruction efforts, due to concerns over the adequacy of the levees and FEMA flood maps.