A state appeals court in Louisiana has issued a ruling thatunder state law there are tough proof requirements for an insurerseeking to use flood exclusion language in a homeowner's policy toavoid paying for a total loss.
The Third Circuit Court of Appeals in a 3-2 ruling, whileostensibly finding in favor of the state's Citizens InsuranceCompany, sent the case back to the lower court for a trial, whereit said the insurer will have to convince a jury that flooding, anexcluded peril, was the total cause of loss.
Without making that case, the courts said Louisiana's valuedpolicy law comes into play. Under that statute, an insurer isnormally required, when there is a complete loss, to pay the fullface value of the policy. The law also precludes a carrier fromaccepting premiums for one face value and then claiming the loss isa lesser amount.
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