In an all-risk homeowners policy, the court also held that, to deny coverage, the insurance company must prove that an excluded risk such as storm surge caused the loss once the homeowner has established they suffered the loss.
The court's much-anticipated ruling came Thursday in the case of Corban vs. USAA. The 5th U.S. Circuit Court of Appeals had ruled in previous cases that wind damage is not covered when water contributes to the loss because of anti-concurrent cause language in insurance policies.
But the state Supreme Court reasoned that wind and water created separate losses in Hurricane Katrina and, once the wind loss occurred, the USAA policy entitled homeowners to coverage. The court said the ACC clause did not apply because the wind and water losses were separate or in sequence, not one indivisible force.
The case has been sent back to Harrison County Circuit Court for trial. The Supreme Court opinion takes precedent over the federal rulings because insurance contracts are governed by states.