Joseph Sher blamed much of the damage to his New Orleans apartment complex on water that inundated the city when levees failed in theaftermath of Hurricane Katrina. He sued Lafayette Insurance Co. afterthe insurer denied most of his claims by saying they were caused by"flood" and therefore not covered by his hazard policy.

Sher won ajury verdict in state Civil District Court that put the firm on thehook for the cost of repairs. The state's 4th Circuit Court of Appealalso sided with Sher in November.

Now Sher's case is one of twoscheduled to be heard Tuesday by the state's highest court that havehigh-stakes implications for Louisiana's insurance market.

Bothcases going before the Louisiana Supreme Court involve disputes overpolicy language between insurance companies and property owners after2005 hurricanes Katrina and Rita.

Lafayette and other insurerssay their homeowner policies don't cover damage from any type offlooding, including water from a levee breach. "A flood is a flood,without regard to cause," said Jim Whittle, assistant general counselfor the American Insurance Association.

In a separate but similarcase last year, the 5th U.S. Circuit Court of Appeals in New Orleansruled that insurers aren't obligated to cover water damage from a leveefailure.

Last week, the U.S. Supreme Court declined to hearappeals in that case from Xavier University and dozens of otherLouisiana policyholders.

James Garner, one of Sher's lawyers,said the federal courts shouldn't have the last word in the disputeover damage from a levee breach. "One thing is certain: the LouisianaSupreme Court makes Louisiana law, not the 5th Circuit," Garner said.

Thestate Supreme Court also was scheduled to hear arguments Tuesday in acase centered on Louisiana's Valued Policy Law, which applies when ahome is destroyed.

Mark and Barbara Landry, whose VermilionParish home was demolished during Hurricane Rita, sued LouisianaCitizens Property Insurance Corp. after the company denied their claim.The Landrys argued that the Valued Policy Law requires Citizens tocover all of the damage to their home, even if only part of the damagewas caused by wind — a covered peril — while the rest was caused byflood water — a non-covered peril.

Citizens and other insurerssay their policies cover damage from wind but not rising water,including wind-driven storm surge, and deny that the Valued Policy Lawobligates them to pay for flood damage.