A state appeals court in Louisiana has issued a ruling that under state law there are tough proof requirements for an insurer seeking to use flood exclusion language in a homeowner's policy to avoid paying for a total loss.
The Third Circuit Court of Appeals in a 3-2 ruling, while ostensibly finding in favor of the state's Citizens Insurance Company, sent the case back to the lower court for a trial, where it said the insurer will have to convince a jury that flooding, an excluded peril, was the total cause of loss.
Without making that case, the courts said Louisiana's valued policy law comes into play. Under that statute, an insurer is normally required, when there is a complete loss, to pay the full face value of the policy. The law also precludes a carrier from accepting premiums for one face value and then claiming the loss is a lesser amount.
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