A jury awarded $2.5 million in punitive damages against State Farm Fire and Casualty Co. for a Mississippi couple for denying their Hurricane Katrina claim. The decision could benefit hundreds of other homeowners challenging insurers for refusing to cover billions of dollars in storm damage.
State Farm said it will likely appeal.
Earlier Thursday, U.S. District Judge L.T. Senter Jr. had taken part of the case out of jurors' hands before they awarded punitive damages to State Farm policyholders Norman and Genevieve Broussard of Biloxi.
The case may have broader implications, given the judge's allocation of the burden of proof:
The Broussards sued State Farm for refusing to pay for any damage to their home, which Katrina reduced to a slab. The couple wanted State Farm to pay for the full insured value of their home plus $5 million in punitive damages. The Broussards claimed a tornado during the hurricane destroyed their home. State Farm blamed all the damage on Katrina's storm surge.
State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm's rising water.
Senter, however, ruled that State Farm couldn't prove that Katrina's storm surge was responsible for all of the damage to the Broussards' home. The judge also said the testimony failed to establish how much damage was caused by wind and how much resulted from storm surge.
Thanks to Kofi Inkabi, a Cal engineering grad student and member of the CCRM team, for bringing this to my attention.