Print

Email story

Comment

Email editor

State Farm to pay for Katrina

By Associated press
Published January 24, 2007

State Farm Fire & Casualty Co. agreed Tuesday to settle hundreds of lawsuits by policyholders and reopen and pay thousands of other disputed claims, a landmark deal potentially worth hundreds of millions of dollars for Mississippi homeowners devastated by Hurricane Katrina.

The settlement calls for State Farm to pay about $80-million to more than 600 policyholders who sued the company for refusing to cover damage from the Aug. 29, 2005, storm. State Farm also agreed to pay at least $50-million - but possibly hundreds of millions more - to thousands of Mississippi policyholders whose claims were denied but didn't sue the company.

State Farm's agreement with Mississippi Attorney General Jim Hood and lawyers for the more than 600 policyholders resolves a civil lawsuit Hood filed against the company for refusing to cover damage from Katrina's storm surge.

Mississippi's mass settlement does not involve claims in other states.

The accord also resolves Hood's criminal probe of allegations that the Bloomington, Ill., insurer fraudulently denied claims after Katrina.

"It's been like a death roll with an alligator for the last two months in these negotiations," Hood said Tuesday.

A "class action" component of the deal requires the company to reopen and review claims filed by roughly 35,000 policyholders who live in Mississippi's three coastal counties but didn't file lawsuits against State Farm.

Hood said State Farm must pay at least $50-million to these policyholders after their claims are reviewed. However, the company could end up paying hundreds of millions more because there is not a cap.

"The agreement greatly reduces the time, the risk and the expense of defending multiple claims in individual litigation," said State Farm spokesman Phil Supple.

Fast Facts:

Katrina settlement

Details of Mississippi's settlement with State Farm Fire & Casualty Co. in a lawsuit over Hurricane Katrina damage:

- For a homeowner left only with a slab, State Farm is to make an initial offer to pay at least 50 percent of the homeowner's policy value. Policyholders with less damage are to receive offers for other levels of payment.

-The offers are to be made in writing. Each policyholder is to have 18 business days, from the date of the offer, to either accept or reject it.

- Those who accept the offer agree not to pursue further legal action in the claim involved. State Farm then has five business days to pay the agreed-upon amount.

- Those who reject the offer retain the option to pursue their own lawsuit in hopes of getting more money.

[Last modified January 24, 2007, 00:01:28]