The IRS has issued a press release (IR-2005-119) explaining the relaxed casualty loss deduction rules for victims of Hurricane Katrina:

Taxpayers who suffered casualty or theft losses as a result of Hurricane Katrina an take advantage of a recent change to the tax law…. Ordinarily, to figure a deduction for a personal casualty or theft loss, you must reduce the loss by $100 and also reduce the total of your casualty and theft losses by 10% of your AGI. Only the excess over these $100 and 10% limits is deductible. The new law removes these limits for Hurricane Katrina losses, so that the entire amount is deductible. To qualify, a loss must be attributable to Hurricane Katrina and it must have occurred after August 24, 2005, in the Presidentially-declared disaster area. The $100 and 10% limits still apply to losses that were not caused by Hurricane Katrina. Like all casualty and theft losses, Hurricane Katrina losses must be claimed as an itemized deduction. If you take the standard deduction you cannot claim them. You cannot claim a deduction for any part of a loss for which you receive or expect to receive insurance or other reimbursement.