Potentiality of Coverage
Hurricane Litigation; Homeowners

Chauvin v. State Farm Fire & Casualty Company
495 F.3d 232 (5th Cir. 2007)
No. 07-602 (U.S. Jan. 14, 2008)

Value Policy Law applies only when total loss results from covered peril.

The Supreme Court refused to review a Fifth U.S. Circuit Court of Appeals' decision affirming a district court's dismissal of homeowners' claims against their insurers alleging their homes were totally destroyed in Hurricanes Katrina and/or Rita. The district court correctly found Louisiana's Value Policy Law (VPL) does not apply when a total loss does not result from a covered peril.

In so ruling, the Fifth Circuit agreed with the insurers' argument that the VPL does not require them to pay the agreed face value of the policy because the total loss was not causes by a covered peril. After considering the purposes of the VPL, the Fifth Circuit was convinced that the insurers' construction of the VPL best conformed with its legislative purpose. Thus, the VPL only requires an insurer to pay the agreed face value of the insured property if the property is rendered a total loss from a covered peril.

Texas Insurance Law & Litigation Alert
February 15, 2008