In Landry v. Louisiana Citizens Prop. Ins. Co. (Citizens), the Louisiana Supreme Court recently upheld the applicability of a provision in Louisiana’s Valued Policy Law statute which excepts insurers from the obligation to pay insureds the full value of the policy without deduction or offset in cases of total loss, where the parties have validly agreed to an alternative loss computation at the time of contracting.
Mark and Barbara Landry lost their home to Hurricane Rita. Their homeowners’ policy with Citizens covered loss caused by wind and rain, but excluded damage caused by floodwaters. The parties disputed the extent to which the loss was caused by covered perils. The Landrys filed suit, asserting entitlement to the full insured value of the home under the statute. Citing the policy’s floodwaters exclusion, Citizens argues that reimbursement for the loss should be computed in such a way as to include only loss caused by any covered peril, as set forth in the terms of the policy and as additionally incorporated by a signed supplement to the application.
The Louisiana Supreme Court held that the alternative loss computation provisions contained in both the policy and the signed application supplement unambiguously satisfied the requirements of the statute’s exception, and therefore examined the policy’s alternative loss computation provisions. Finding that those provisions did not require Citizens to pay the full face value of the policy, the court remanded the case back to the trial court for a determination of loss.