Rep. Gene Taylor, D-Miss., called for a similar study in legislation designed to reform the NFIP, but that bill failed to win passage. Like Sen. Lott, Rep. Taylor has filed suit against State Farm over the handling of a claim after the hurricane.

The language of the appropriations bill does not mandate the mechanics of how a study would work, and Mr. Youngblood said the specifics of the study would be determined by the inspector general's office.

Mr. Youngblood said Sen. Lott expects only for the study to “determine whether the [NFIP] program was misused in any way.”

Fraser Engerman, a representative for State Farm, said “most of the government programs we participate in, including the National Flood Insurance Program, already have longstanding auditing procedures. We understand that is part of the process and we intend to cooperate fully with any additional inquiries that may come our way.”

The DHS probe will join Mississippi inquiries by federal and state grand juries, which are investigating State Farm's Katrina claims handling.

Sen. Lott's case against the company is scheduled for next June in U.S. District Court in Gulfport, Miss. He filed suit when his home was destroyed and the company told him the loss was not covered because the damage was caused by flooding–a peril excluded in his policy.

Sen. Lott contends his agent represented that the policy covered all hurricane damage, and that the policy is supposed to cover hurricane-driven storm surge.

When he announced his action, Sen. Lott said he had “joined in a lawsuit against my longtime insurance company because it will not honor my policy, nor those of thousands of other South Mississippians, for coverage against wind damage due to Hurricane Katrina.”

He is represented by the law firm of his brother-in-law–high-profile attorney Richard Scruggs. In his first case to be brought on the wind vs. water issue, Mr. Scruggs secured his clients only minimal damages and the insurer claimed victory.