Katrina floods not covered by insurance: court

Thu Aug 2, 2007 7:44PM EDT
NEW YORK (Reuters) - A U.S. appeals court ruled on Thursday
that three major insurers are not responsible for flood damages
in New Orleans -- even if "negligence" caused flooding that
inundated the city during 2005's Hurricane Katrina.
Residents of the area, along with Xavier University, sued
property insurers Allstate Corp, Travelers Cos Inc and mutual
insurer State Farm.
Residential property insurance policies exclude flood coverage,
which is provided under a federal program. But the plaintiffs
said that, because the negligent design, construction and
maintenance of the levees was responsible for the breaks, the
insurers should pay claims on their homes and property.
The U.S. Court of Appeals for the Fifth Circuit, however, ruled
the insurers' contracts were valid. Even if the construction of
the levees was faulty, the resulting floods were excluded from
coverage, the court said.

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