More than two years after Hurricane Katrina devastated the Gulf Coast, some State Farm Insurance Company policy holders in Mississippi have finally settled claims with the insurer. But the 103 policy holders who were finally able to resolve their claims represent just a small fraction of homeowners who sued insurance companies following Hurricane Katrina. In fact, <"http://www.yourlawyer.com/topics/overview/state_farm_katrina_claims">State Farm alone still faces nearly 2,000 lawsuits in Mississippi, Louisiana and Alabama over its handling of Katrina claims.
The terms settlement, which covers 103 Mississippi homeowners, are confidential. But the lawyer representing all of the policy holders told the Associated Press that the settlement is proof that â€œsmall individuals can stand up to large insurance companies and still have a resolution that is acceptable to themâ€. Of the 103 policyholders involved in the settlement, forty-seven had already filed suit against State Farm, while the rest where preparing to do so.
State Farm was the largest insurer in Mississippi when Katrina made landfall in 2005 along the stateâ€™s Gulf Shore. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for onlyn pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.
On January 11, 2007 a federal judge ordered State Farm to pay $223,292 in damages to a couple whose home was damaged by Hurricane Katrina. The judge also awarded the couple $2.5 million in punitive damages for State Farm’s failure to pay the claim. Less than two weeks after this ruling, State Farm entered into an agreement to settle hundreds of other suits brought by angry policyholders. That same month, State Farm agreed to pay out more than $80 million to settle with another 640 Mississippi policyholders. And in April, State Farm agreed to pay out another $50 million after re-evaluating the claims of 35,000 Mississippi residents. In regards to this latest settlement, a representative from State Farm told the Associated Press that it was â€œpleased with this settlement in that it spares our customers and our organization from time-consuming and expensive litigation.â€
Hurricane Katrina caused more than $80 billion in damage along the Gulf Coast, making it the single most expensive natural disaster in US history. The tactics used by insurance companies have also led to more insurance lawsuits than any other disaster.