[StBernard] Louisiana Value Policy Law

[Westley Annis]

I found this after doing a Yahoo search.  I'm not sure what it all means.
Cindy

The Legal Aftermath

Author: News
September 01 (BestWire) -- It's a hot-button issue that Louisiana's property
insurers likely don't even want to think about, but it's bound to happen in
the aftermath of the widespread destruction of Hurricane Katrina. The
inevitable, say industry experts and attorneys, is that disputes and
lawsuits are certain to erupt over whether policyholders whose homes were
destroyed should be paid the full face value of their homeowners policies
when hurricane damage was caused by flooding.  
 
"In an event of this magnitude, it's inevitable that there will be some
disputes" on damage that was water-related but associated with wind-driven
rain, for example, Robert Hartwig, senior vice president and chief economist
for the Insurance Information Institute, told BestWire. Adjusters are
trained in distinguishing flood from wind-related losses, he added.  
 
A potentially big issue in Louisiana after Katrina is the Florida Fourth
District Court of Appeal's 2004 ruling in a Broward County case, Mierzwa vs.
Florida Windstorm Underwriting Association. In a blow to Florida's property
insurers, that court, interpreting that state's long-standing "valued policy
law," allowed the insured to recover policy limits under wind coverage, even
though the insured received a substantial payment for flood damage under the
National Flood Insurance Program (BestWire, June 2, 2005). 
 
In many cases, after Katrina, there will be a combination of loss, said
Hartwig. "And in those cases ... there will be some sort of apportionment of
the losses and an insurer will look at the structure and try to ascertain
... OK, yes, there was flood damage but there was also some wind-related
damage." 
 
However, simply because there was structur al damage "does not mean that the
insurer is going to be paying limits on every policy," Hartwig said. The
structural damage produces, in most cases, some kind of limited amount of
damage below the policy limits. If the reason for the home being considered
a constructive total loss is essentially because of the flood damage, "then
there's a major role to be played by the flood insurer, if there is one,"
Hartwig said. 
 
W. Shelby McKenzie, partner in the law firm Taylor, Porter, Brooks &
Phillips based in Baton Rouge, said Louisiana's "valued policy law" is
similar to Florida's.  
 
Under Louisiana's valued policy law, an insurer must pay the full value of
the loss, without deduction or offset, if a valuation was placed on the
property and such valuation was used to calculate the premiums, McKenzie
said, citing the statute. He added, however, that if an insurer provided
clear notice in the policy of a different method of calculating the loss,
then the insurer would not be required to pay the full value of the loss. 
 
McKenzie, co-author of the treatise, "Louisiana Insurance Law & Practice,"
noted that since Louisiana's valued policy law was re-enacted in 1992,
"there's been no reported decision" interpreting its language.  
 
If wind vs. flood coverage disputes erupt following Katrina, Louisiana
courts "would certainly have access to the Florida decision," McKenzie said.
"They could either follow that decision or make their own determination of
the meaning of the Louisiana statute." 
 
Causation is a big issue. Don Griffin, vice president of personal lines for
the Property Casualty Insurers Association of America, said that there
"certainly will be some development on whether some of this is related to
flood losses or whether it's related to windstorm losses (BestWire, Aug. 29,
2005). 
 
The damage in Louisiana was caused mostly by flooding, said McK enzie.
However, "if you are out on the coast, you got hit by storm surge. The storm
surge might be more of an issue on whether it was wind or flood."  
 
In the meantime, in a victory for Florida's homeowners insurers, legislation
passed earlier this year precludes any claims being filed from post-2004
storms on the basis of the Mierzwa decision. The industry called this the
"Mierzwa fix." 
 
But the issue still looms large in Florida.  
 
Perhaps hundreds of millions of dollars are at stake for Florida's insurers,
depending on the outcome of a policyholder class-action lawsuit against
Citizens Property Insurance Corp., the state-run insurer of last resort. In
May, Citizens policyholders emerged victorious in round one of their
high-stakes class-action lawsuit against Citizens, when a Leon County judge,
upholding the 2004 Mierzwa decision, ruled they can be paid the full face
value of their homeowners policies, even when hurricane dam age is caused by
flooding (BestWire, May 19, 2005) 
 
Most of the plaintiffs are from Florida's panhandle, hard hit by Hurricane
Ivan, which involved storm surge. In the case, a Leon County judge granted
summary judgement for the plaintiff, Scylla Properties LLC. The lawsuit's
outcome could affect every homeowners insurer in Florida, say some
attorneys. 
 
Florida insurers have appealed that decision to the First District Court of
Appeals in Tallahassee. 
 
Stuart Michelson, the lead attorney for the plaintiffs in the Scylla case,
said based on Katrina's size, "it's inevitable that the courts will be
besieged with lawsuits. That's the next shock." 
 
Mississippi also has a valued policy law, according to PCI. 
 
 

________________________________

Published: 9/8/2005
http://www.programbusiness.com/NewsFinance/ArticleDetail.asp?artID=2364


 


-------original message--------
MY AUNT EMAILED ME TODAY AND SAID SHE HEARD ON TV THAT THERE IS A LOUISIANA
LAW ---- THINKS IT WAS CALLED THE LOUISIANA VALUE POLICY LAW --IF SHE
UNDERSTANDS IT CORRECTLY --IF THE HOUSE THAT YOU ARE LIVING IN IS DESTROYED
YOU CAN COLLECT FLOOD INSURANCE & THE INSURED VALUE ON YOUR HOME OWNER
POLICY ---NOT JUST WIND BUT THE WHOLE HOUSE -----IT IS A OLD LAW ON THE
BOOKS AND THEY SUGGESTED YOU GET A LAWYER TO HELP WITH YOUR CLAIM ----HAS
ANYONE EVER HEARD OF SUCH A LAW? THANKS.

Heather C. LaBauve