Court backs flood insurance limits

An insurance company isn’t obligated to pay for water damage from the failure of New Orleans-area levees after Hurricane Katrina, the state’s highest court ruled in a case that could affect thousands of homeowners.

In a major victory for insurers, the Louisiana Supreme Court reversed a state appeals court decision that favored New Orleans property owner Joseph Sher in his suit against Lafayette Insurance Co.

In November, the 4th Circuit Court of Appeal said Lafayette’s homeowner policy failed to exclude all forms of flooding because its language was ambiguous. But the state Supreme Court disagreed and said Lafayette was entitled to limit its liability.