Though Hurricane Katrina struck the Gulf Coast nearly 18 months ago, the storm is still landing plenty of punches on insurance companies.

A recent verdict in the case Broussard v. State Farm not only held State Farm responsible for policy limits that totaled more than $230,000 on a loss it had deemed due to storm-surge flooding, but it also put the company on the hook for $2.5 million in punitive damages. The devastating judgment could set a dangerous precedent for State Farm and other companies who supply the Gulf Coast region with homeowners' insurance.

In his ruling, Judge L.T. Senter, Jr., stated that State Farm did not present enough evidence to prove what damage was caused by wind and what was caused by water. He further said that the Broussard's only needed to prove a direct physical loss. It was Senter's first negative ruling against the insurance industry. In August 2006, he affirmed flood-exclusion language contained in most companies' insurance policies, which resulted in a dismissal of a lawsuit made against Nationwide.