Insurers See Storm as Two Separate Events

The majority of homes in areas slammed by the hurricane have policies that cover wind and rain damage, but relatively few had extra insurance to cover flooding. Insurers are posturing to limit the amount of damages by saying massive flooding in storm-ravaged New Orleans is a separate event from the hurricane itself.
This distinction could save insurers billions of dollars more from a catastrophe billed as the costliest natural disaster ever to face the industry. Some carriers have even adopted the phrase "The Great New Orleans Flood" in an effort to make that distinction more tangible.