Hoo-ray! The insurance company lost the Katrina damages case! http://news.yahoo.com/s/usatoday/20070125/cm_usatoday/crazyquiltinsurancesystemdelayskatrinarecovery "Seventeen months after Katrina surged through coastal Mississippi, miles of waterfront are barren, and thousands of residents have been victimized twice. First by the hurricane. And then by a war over insurance. The point of contention? Whether homes were destroyed by Katrina's brutal winds or its surging waters. As absurd as it may sound, private homeowners' policies typically cover wind damage, but not flood damage, even if the water was driven by hurricane-force winds. Tuesday, some of the litigants called a truce. State Farm, the USA's largest home insurer, agreed to settle hundreds of homeowner lawsuits and reopen 35,000 previous insurance settlements, fronting $130 million to pay off claims. That will help some people make decisions about whether, where and how to rebuild. But it doesn't apply to other insurers or other states - even neighboring Louisiana, where uncertainty over insurance claims has bogged down the rebuilding of storm-ravaged New Orleans. And it doesn't resolve the exasperating wind-or-water argument. The flood exclusion has been standard in insurance policies since the late 1960s, when the federal flood insurance program was created. Homeowners in coastal areas are encouraged to carry that insurance, and the flood exclusion in their homeowners' policies usually is plainly spelled out. But when houses are torn from their foundations, as in Katrina, the precise cause can be difficult to pinpoint, inviting dispute, delaying recovery and leaving people stranded in uncertainty - not to mention living in FEMA trailers. When there's reasonable doubt, insurers should bear the burden of proof and resolve claims in the homeowners' favor. On Jan. 11, a federal judge and jury in Mississippi drove home that point. The judge ordered State Farm to pay more than $230,000, the full policy limit, for a home lost to Katrina. Then, the jury slapped State Farm with $2.5 million in punitive damages."