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NAMIC: Court Decision Upholds Validity of Flood Exclusions in Homeowners’ Policies

INDIANAPOLIS (Aug. 3, 2007) – The National Association of Mutual Insurance Companies (NAMIC) today commended a U.S. appellate court decision upholding flood exclusions in insurance contracts. The ruling by the U.S. Circuit Court of Appeals for the Fifth Circuit reversed a district court decision that held that the flood clauses in most homeowners’ policies covering residents of Louisiana affected by flooding from Hurricane Katrina were ambiguous.

“We are pleased the court has reaffirmed the validity of flood exclusions in homeowners’ insurance contracts,” said Neil Alldredge, NAMIC’s vice president for state and regulatory affairs. “While we sympathize with the plight of the homeowners and residents affected by this tragedy, this was the correct decision for this issue.”

Dozens of homeowners in Louisiana brought the suit after Hurricane Katrina damaged their homes. The plaintiffs maintained that their homeowners’ insurance companies should pay for the damage because the flooding to their homes was caused by the failure of man-made levees to contain the flood waters. In the district court, they argued successfully that the exclusions were written in a way that made it unclear whether flooding not caused by “Acts of God” should be covered.

But the appeals court disagreed, saying, “Regardless of what caused the failure of the flood-control structures that were put in place to prevent such a catastrophe, their failure resulted in a widespread flood that damaged the plaintiffs’ property. This event was excluded from coverage under the plaintiffs’ insurance policies….”

NAMIC had filed an amicus curiae brief in the case.

“This case underscores the need for residents in flood zones to purchase insurance through the federal government’s National Flood Insurance Program,” said Justin Roth, NAMIC’s senior federal affairs director. “It’s another illustration of why the nation’s flood maps need to be updated and homeowners in those areas need to be aware of, and urged to purchase, coverage through the NFIP.”

For further information, contact
Nancy Grover
(202) 628-1558 Tel
(202) 628-1601 Fax

Posted: Friday, August 03, 2007 12:00:00 AM. Modified: Friday, August 03, 2007 1:59:50 PM.

317.875.5250 - Indianapolis  |  202.628.1558 - Washington, D.C.

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