NU ONLINE NEWS SERVICE, November 29 – A federal judge has ruled that the policies issued by many insurers do not exclude claims for water damage caused when hurricane Katrina breached the New Orleans levees.

U.S. District Court Judge Stanwood R. Duval in his ruling Monday noted that the impact of his decision on individuals as well as the insurance industry might be considered overwhelming.

The judge found that flood damage exclusion language in policies issued by Allstate and other carriers does not exclude water damage caused by negligent or intentional acts of man. It does not address the ambiguity of the term flood and the fact that all of the listed causes appear to be the result of natural occurrences, not the monumental civil engineering debacle that is alleged by plaintiffs.

Plaintiffs in the consolidated case argued that the water damage was not the result of flood, but was water intrusion, caused simply from a broken levee wall and the result of third-party negligence.

Duval, finding it was the judicial role to interpret the common intent of the parties to the contract, wrote that all risk generally allows recovery for all fortuitous losses, not resulting from misconduct or fraud, unless the policy contains a specific provision expressly excluding the loss from coverage

Under Louisiana law, according to Duval, unless there is a specific exclusion for the type of water damage that an insured has incurred, coverage is presumed under these policies.

The insurers, in an argument noted by the judge, maintained that flood is not limited to natural events.