Insurers in the Gulf Coast received more bad news when another Katrina-related negative verdict was announced in a case that involved a Louisiana homeowner and insurance giant Allstate.
According to an article appearing on BusinessWeek.com, a federal U.S. district court jury awarded more than $2.8 million to Robert Weiss, who lost his home to Hurricane Katrina. Allstate had claimed that most of the damage was due to storm surge, an event not covered in most homeowners' policies.
But according to BusinessWeek writer Michael Kunzelman, the jury disagreed, finding that Weiss was owed $561,600 for wind damage to his home and its contents, plus another $2.25 million in damages and penalties for not paying the claim quickly enough. Weiss is reported to have had a federal flood insurance policy in addition to his Allstate homeowner policy. According to Kunzelman, the Allstate policy had limits of $343,000 for the dwelling and $240,100 for personal property. Allstate reportedly attributed most of the damage to storm surge and paid just over $34,000 for the loss, which included additional living expenses.
According to Kunzelman's article, the jury's decision stemmed at least partially from the fact that Allstate used an engineering report that was written by someone who had not yet visited Weiss' home, a practice some in the industry have called commonplace but has come under fire in recent months.
The verdict is positive news to thousands of homeowners who have questioned insurers for refusing to pay their claims not only in Louisiana, but in surrounding states such as Mississippi. One case in Mississippi, Broussard v. State Farm, also found in favor of the policyholder and awarded similar-sized compensatory damages as those awarded Weiss, but those were later reduced to $1 million. State Farm sought to settle other remaining Mississippi lawsuits as a whole, but an agreement was never finalized. However, the company announced this week that, with the help of Mississippi Insurance Commissioner George Dale, it was reopening thousands of Mississippi "slab" claims and was committing at least $50 million to the reevaluation process.
It remains to be seen how the verdict will affect insurance availability in Louisiana, but given State Farm's reaction after a negative verdict in the Broussard case, it is likely Allstate will pull back or exit the homeowners' market in Louisiana, making insurance more expensive and harder to obtain for state residents.
Interested in more legal news and in-depth articles? Head over to Claims' legal channel for more information.
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