The insurance industry won its second critical victory in three days on Hurricane Katrina-related issues when a federal Appeals Court panel accepted the industry's interpretation of its contract language on wind- vs. water-related claims.

The 5th U.S. Circuit Court of Appeals in New Orleans–the same circuit that has decided other Katrina-related claim cases–on Monday affirmed a lower court ruling in Chauvin v. State Farm Fire & Casualty, holding that Louisiana's valued policy law only applies if the total loss was caused by a covered peril.

In its decision, the panel rejected arguments that the valued policy law guiding homeowners policies has to pay the full value of the policy when the home was destroyed by a combination of flood and hurricane wind damage.

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