The U.S. Court of Appeals for the Fifth Circuit has overturned one of the first wind-versus-water cases to reach verdict following Hurricane Katrina by ruling in favor of defendant State Farm, granting the insurer a new trial, and removing $1 million in punitive damages that were awarded in the case.

The case in question involved Broussard v. State Farm, which was decided by U.S. District Judge L.T. Senter. The Broussard's home was destroyed down to the slab following Hurricane Katrina, but the issue of whether wind or storm surge was at fault for the loss brought the case to the courts. Under most homeowners' polices, storm surge and flooding from hurricanes are excluded and covered only through a separate policy purchased from the government-funded National Flood Insurance Program. Losses due to wind, however, typically are covered.

In situations where the cause of the loss cannot be determined, it has generally been the burden of the insurance company to prove the extent of the loss attributable to water and to pay for any wind damage. If the loss cannot be attributed -- as in the Broussard case in which nothing was left but a concrete slab -- the insured is given the benefit of the doubt. Insurers had attempted to deal with this situation by including anti-concurrent causation exclusions in homeowners' policies, but in a separate case decided prior to Broussard, Judge Senter ruled that the language was ambiguous.