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"The efficient proximate cause of loss is the levee failure which may or may not be excluded"

How is "levee failure" the CAUSE of loss? Did they fail on their own due to deterioration or did something else like say, wind or tidal surge act as the impetus of their failure? If hurricane force winds snap a telephone pole that crushes my house, is the cause of loss "telephone pole failure"?

 

Whatever CAUSED the levees to fail - whether it was wind or water. While the levees were an engineering disaster, something caused them to fail. Was it wind? Was it rising water? Was it waves caused by wind?

If my house in South Florida was built improperly and say the contractor didn't use hurricane straps to secure my trusses and the first big storm of 2007 blows my roof into the Everglades, does that mean my cause of loss is a workmanship issue? Now I'm sure my carrier will want to subrogate against the contractor who did not comply with the South Florida Building Code, but that doesn't change the fact that wind caused my loss.

Steve, I think the key to this is that the federal judge only ruled that the ISO "flood" exclusion is ambiguous. Pipe ruptures and dam breaks have provided prior decisions, some of which are referrence in the Federal court case, that cause the "tension" and "ambiguity". Because of the nature of the insurance contract any benefit accrues to the insured.

Gail, my thought is that Hartford and State Farm have generated a knife that cuts both ways. I don't think I would like to be a company that is not paying losses when other companies are. And, yes, I think that the very fact that some policies have the exclusionary wording and some have the ISO wording demonstrates the "tension" and "ambiguity" involved.

From where I am I can see the infinite variety of these claims and the challenge involved in handling them. What about the insured that had the ISO wording, a wind claim and no flood policy, but had serious flood damage, then because of the situation abandoned the risk to the mortgagee?

Bill, this damage may be covered under an all risk except as excluded because the cause that excludes flood damage has been judged to be "ambiguous."

This is some interesting reading for those who wish to know more about the levee system and flood walls surrounding NOLA. It was never designed to withstand any more than a Cat 3. Of course it failed, it was known it would fail, and it did so. To construct an effective, new levee and flood wall system would cost billions of dollars and years to finish. Can we, as taxpayers afford this, of course not. We have billions of dollars going into the war in Iraq. We are not as important as the Iraqi's.

Copy and paste both sites in your browser.

http://www.fas.org/sgp/crs/misc/RS22238.pdf

And here is a map of all the levee system for your review.

http://www.nola.com/hurricane/popup/nolalevees_jpg.html

Very interesting finding this while looking for something else today on the web:

http://web.mit.edu/12.000/www/m2010/teams.html

Massachusetts Institute of Technology has teams studying the insurance coverage issues and the levee breaks.