The Louisiana Supreme Court has ruled that the state's valued policy law cannot be invoked by homeowners where the loss is partly caused by a noncovered flood peril if the policy explicitly contains a loss computation method different from the valued policy law.

The court sided with Louisiana Citizens Property Insurance Corp. in a case brought by policyholders Mark and Barbara Landry, whose Vermilion Parish home was destroyed by Hurricane Katrina in 2005.

Under the valued policy law, in cases where a building is totally destroyed, the insurer must generally pay the face value of the policy rather than the actual cash value of the loss.

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