Supreme Court declines to hear flood insurance plea

The U.S. Supreme Court won't hear a federal lawsuit brought by Hurricane Katrina victims against private insurance companies, but a similar case at the state level will go to Louisiana's highest court next week.

The federal high court rejected appeals by Xavier University and 68 other individuals and businesses who claimed their hazard insurance policies should have covered flooding caused by the failure of man-made levees.

Last August, the 5th U.S. Circuit Court of Appeals overturned a district court ruling that said the policies' flood exceptions were vague. The appeals court panel, comprised of three Texas judges, said that the waters that covered 80 percent of the city after Hurricane Katrina constituted a "flood," even though the policies didn't specifically include man-made failures in its definition of the word.

In the federal case, federal judges were interpreting Louisiana insurance law. But another hurricane victim, Joseph Sher of Uptown New Orleans, made nearly the same argument in state court to challenge his insurer's decision not to cover his flood damages. So far, the district and appeals courts have ruled in his favor. The state Supreme Court has scheduled oral arguments for next Tuesday.

Attorneys on both sides of the Sher case have said the ruling could determine the future of millions of dollars worth of insurance claims from the 2005 hurricanes.
To read the story on the federal 5th Circuit's ruling in the Xavier case last August, click here.