Major Wind v. Water Case Overturned

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Major Wind v. Water Case Overturned

The Policyholder of America - Advocate Newsletter June 2008 issue*

By Gilkey, Managing Editor CLAIMS MAGAZINE

The case in question in-volved Broussard v. State Farm , which was

decided by U.S. District Judge L.T. Senter. The Broussard¡®s home was

destroyed down to the slab following Hurricane Katrina, but the

issue of whether wind or storm surge was at fault for the loss

brought the case to the courts. Under most homeowners¡® polices,

storm surge and flooding from hurricanes are ex-cluded and covered

only through a separate policy purchased from the gov-ernment-funded

National Flood Insurance Pro-gram. Losses due to wind, however,

typically are covered.

In situations where the cause of the loss cannot be determined, it

has gener-ally been the burden of the insurance company to prove the

extent of the loss attributable to water and to pay for any wind

damage. If the loss cannot be attrib-uted ¡ª as in the Broussard case

in which nothing was left but a concrete slab ¡ª the insured is given

the benefit of the doubt. Insur-ers had attempted to deal with this

situation by includ-ing anti-concurrent causa-tion exclusions in

home-owners¡® policies, but in a separate case decided prior to

Broussard , Judge Senter ruled that the lan-guage was ambiguous.

On Jan. 11, 2007, Judge Senter made an unusual move by issuing a

bench verdict against State Farm, which prevented the jury in the

case from issuing its own decision. In an article that appeared in

Claims¡¯ April 2007 issue, Attorney Jay Brown speculated that Judge

Senter did so due to the evidence being ¨Dso overwhelming against

State Farm that no reason-able jury could find in the insurance

company¡®s fa-vor.¡¬ Brown went on specu-late that it also seemed as

though the judge felt there was an absence of credible testimony by

State Farm, since he also ruled that the

carrier did not offer ade-quate evidence at trial to meet the burden

of alloca-tion.

In the most recent deci-sion, the court of appeals held that the

district court erred in entering a judg-ment as a matter of law for

the Broussards. The ap-peals court further found that the district

court erred by even submitting the question of punitive dam-ages to

the jury, thus va-cating the $1 million that was awarded to the

Brous-sards above and beyond their policy¡®s limits.

¨DThis ruling confirms our belief the jury should have been given an

opportunity to evaluate the question of what damage was caused by

wind and what damage was caused by water,¡¬ said State Farm, in a

release found on their web site. ¨DThe ruling also con-firmed our

belief that the claim was handled rea-sonably and per the con-tract,

and, therefore, there was no basis for punitive damages. Our appeal

in this case was important to ensure court rulings remain consistent

with the evi-dence presented at trial, the law, and an accurate

interpretation of the insur-ance contract.¡¬