NU Online News Service, Oct. 3, 2:48 p.m. EST

A recent decision in Louisiana Supreme Court prevents a homeowner from collecting for the same damage twice.

At issue in the case, Shirley Frught vs. Lafayette Insurance Co., was whether Frught—who was paid $125,000 on her flood policy following Hurricane Katrina in 2005—was due more money from her homeowners insurer, Lafayette.

Lafayette had adjusted the claim and paid Frught a small amount for what it determined to be damage caused by wind. Damage caused by flood, or storm surge, is not covered by a standard homeowners' insurance policy.

Stephen Barry, attorney for Lafayette, says the outcome of the Supreme Court trial basically determines that a homeowner cannot be made whole twice.

“You can't collect for the same damage twice,” he says. “And you can't re-characterize your damages. The terms of policy must be respected.”

A homeowners' policy and a flood policy with the National Flood Insurance Program exist to cover two separate perils.

“You hear, 'We paid two premiums,'” explains Barry. “But that was for two different perils. The cause of the loss and the perils insured are important.”

It is possible to collect payments under both policies but not above what it would take to make the homeowner whole.

Frught was made whole with her payment from NFIP, the Supreme Court jury says. She paid $75,000 for the home she lived in when Katrina struck, and then sold it for $23,000. Repairs on the house by the buyer were done for about $50,000, Barry says.

Area reports suggest homeowners will now have a hard time getting homeowners' insurance claims adjusted—that companies will wait until the NFIP pays first.

That is not the case, Barry says.

“There are bad faith laws,” he says. “Insurers have a short window to adjust a claim and make a payment or they can face a bad faith claim.”

Another similar case, Robin and Hildrith Wegener vs. Lafayette Insurance Co., remains scheduled for trial.

Special Reports /

La. Supreme Court: Homeowners Can Be Made Whole Once

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