Insurers have won a major round in a federal case involving Louisiana homeowners seeking full value replacements under windstorm coverage for houses that were destroyed by flood as well as wind.

U.S. District Court Judge Richard T. Haik Sr., in Lafayette, La., on Thursday issued a partial summary judgment in favor of State Farm Fire & Casualty Company in a case involving a demand for payment of the full face value of homeowners' policies pursuant to Louisiana's valued policy law.

The case, Joe Turk, et al. vs. Louisiana Citizens Property Insurance Corp., et al., was filed in January by two homeowners as part of a proposed class action for similarly situated homeowners. The suit seeks recovery of the full face value of homeowners' policies from defendant insurers.

Their complaint claimed they were entitled to the full value as a result of some damage to their homes from wind damage, a covered peril, and “total loss” of their homes caused by water damage, a noncovered peril.

In granting State Farm's motion for partial summary judgment, the court agreed with State Farm that the valued policy law was inapplicable to the claims where the covered property was not rendered a total loss by a peril covered under the insurance policy.

The judge's ruling in this case represents a positive development in the multiple litigation environment in Louisiana, said David Reddick of the National Association of Mutual Insurance Companies.

Mr. Reddick noted that while Louisiana property writers secured a favorable ruling over the full value replacement issue, their Florida counterparts have not been so lucky.

He said last year a Florida state appeals court upheld the concept in value policy law that insurers are liable for noncovered perils such as flood if the property is damaged in part by a covered peril such as wind.

Sam Miller, executive director of the Florida Insurance Council, said property-casualty insurers are appealing that ruling to the state's highest court, but it is a long process.

Meanwhile, some policyholders are suing for total loss coverage in class actions based on that decision.

Special Reports /

Insurers Win In Value Policy Case

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