The Associated Press is reporting that Allstate and Nationwide Mutual Insurance have been subpoenaed by a federal grand jury that is investigating the insurance industry's handling of Hurricane Katrina claims in Mississippi.

Questions about Allstate's and Nationwide's claim practices largely stem from determinations by both companies that damage was caused by flooding, not hurricane winds. Under most homeowners' policies, flooding is not covered. Coverage for flood must be purchased through the National Flood Insurance Program (NFIP), which is a government-funded agency.

According to the article, the subpoena was the second one disclosed by Allstate this month. The company received its first subpoena from the U.S. Department of Homeland Security in early May, which involved an investigation into whether claims and financial burdens were unfairly relegated to the NFIP instead of being paid by insurers under their homeowners' coverage.

Both companies were reportedly complying with the U.S. attorney's office. For the complete AP story, please click here.

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