Home damage claims "will come out of the woodwork" if a federal court decision concerning New Orleans flood damage from levee breaks is allowed to stand, according to one group of analysts.
But even as Morgan Stanley researchers voiced caution over the ruling, made by U.S. District Court Judge Stanwood R. Duvall Jr., they and others found many reasons to doubt it will stand.
The judge in New Orleans found that flood exclusion language in many insurers' policies was ambiguous and failed to account for water damage caused by third-party negligence--namely, poor levee construction.
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