Unnatural Disasters and Supreme Courts: Throw Xavier a Bone

Water damaged every building on Xavier's Campus in August of 2005 after the levees broke

My employer, Xavier University of Louisiana, last week learned that the U.S. Supreme Court would not hear its appeal. Earlier a federal appeals court ruled that Xavier and other institutions and homeowners could not sue their insurance companies for repairs if the insurance policies excluded flood coverage. Xavier and others argued that since the flooding of its campus was caused by human error and not a natural disaster, that the "all risk" insurance policy ought to kick in and cover damages. A federal judge in Louisiana agreed with Xavier in 2006, but it was overturned by the U.S. Court of Appeals for the Fifth Circuit. Since the Supreme Court opted to not way in, the decision against Xavier seemed like a done deal. But not so fast...

Today two cases are being argued before the State Supreme Court. These are the first Katrina and Rita related cases to be brought to the LA Supreme Court, and whatever decision is reached in these cases, the federal courts will have to follow these rulings. The first case is the one that effects Xavier. New Orleans resident, and amazingly enough a Holocaust survivor, Joseph Sher sued Lafayette Insurance Co., arguing that his homeowner's policy should have covered the water damage because the failure of the levees was the result of human error and not a natural disaster. Sher won in lower courts and in this case Lafayette Insurance is arguing to have the ruling overturned. The other case involves a couple named Landry who claim that the "valued policy" law means that insurance companies need to pay the full value of the policy if their property is destroyed by a combination of forces, some of which were covered like wind, and some of which were not, like storm surge.

Of course the insurance industry is claiming the apocalypse will come immediately if either Sher or Landry succeeds. They argue that the insurance industry will pull out of the region. But screw them. They already are out of the region. I can only get homeowner's and flood insurance through Citizens, the state insurer of last resort. Nobody else will write me a policy for many years I imagine, and the rates are through the roof. We need to start demanding that companies who want to write auto policies in the state need to also offer homeowner's. I was happy to see that our Insurance lobbyist, I mean Insurance Chief Donelon finally fined Allstate $250,000 the maximum allowed in our insurance friendly state.