State Farm Settlement on Katrina Claims? We'll See!
In a settlement that may help Mississippi homeowners whose homes were ravaged by the winds of Hurricane Katrina, State Farm Insurance has “agreed” to pay some disputed “wind v. water” claims.
State Farm agreed to pay at least 50% of damages to 1,000 homeowners whose property was totally destroyed --- “stripped to the slab” as it is called in insurance parlance. Any of the remaining 35,000 homeowners can “re-argue” their cases to State Farm about the extent of wind damage. The settlement could end up costing State Farm as much as $500 million, the Mississippi attorney general said this week.
But don’t bet the ranch that insurance companies will resolve most of these claims. For example, State Farm is not agreeing to settle what it considers to be “flood damage,” so many of the wind v. water claims may still be disputed. It would be "inappropriate and incorrect" to assume the settlement "serves as a template for potential settlements with other insurers," says Robert Hartwig, chief economist for the Insurance Information Institute. Allstate Insurance said flatly that the State Farm settlement "does not impact" its lawsuits.
Still, some believe that the settlement will help certain Mississippi homeowners who have been waiting to leave trailers and the homes of friends. We’ll see.