Residential property insurance excludes flood damage, which is covered by a federal programme.

New Orleans residents and Xavier University argued that the insurers should pay because the negligent design of a dam caused the flooding.

The court said the insurers were not liable even if there was negligence.

New Orleans flooded after levees and flood walls in the canals and drainage systems holding back the Mississippi River were breached in the wake of Hurricane Katrina.

The flooding cost hundreds of lives and caused billions of dollars worth of damage.

The insurers involved in the case were Allstate, Travelers and the mutual insurer State Farm.

Further appeals

The court’s decision overturned an earlier ruling by a lower court.

“We are pleased that the court concluded that policy exclusions for flood damage are metropolitan property and casualty insurance
and enforceable,” said Michael Siemienas, a spokesman for Allstate.

But the case will go on to further appeals, according to James Garner, a lawyer property and casualty insurance terms Xavier University.

“The issue will be argued again on 12 September in the Louisiana State Court of Appeals and, ultimately, at the state supreme court,” he said.