State Farm Reaches New Settlement in Katrina Case

Perhaps shaken by a ruling against them earlier this month, State Farm Fire & Casualty Co. announced that they’ve agreed to a settlement in another Katrina-related case in Mississippi. Although the terms of the settlement were not disclosed, legal analysts believe that the insurance company agreed to pay roughly $1 million to settle.

On January 11, a federal judge in Mississippi declared that State Farm was liable for damage to a couple’s Biloxi home following Hurricane Katrina. In a case brought by Norman and Genevieve Broussard, the company was not only responsible for paying $223,292 in damages to the home, but more significantly, a jury awarded $2.5 million in punitive damages to the Broussards.

At issue in that case was whether the damage to the Broussards’ home was caused by excessive winds (covered by insurance) or by flooding (insurers are claiming they are not liable for water damage). But the ruling, by Judge L.T. Senter, clearly and definitively put the burden of proof on State Farm to show that water was the primary cause of the damage.

The newly settled suit was considered very similar to that of the Broussards, and State Farm, likely fearing a similar result, acted just days before the trial was set to begin. In this case, Richard Tejedor of Long Beach, Mississippi, originally had asked for $5 million, most of which would have been in punitive damages.

State Farm is still negotiating a settlement of more than 600 Katrina lawsuits in the state of Mississippi, but in light of the recent ruling, plaintiffs may be more aggressive in seeking compensation.

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