Group Settles 22 Mississippi Katrina Cases with Insurer

State Farm Fire and Casualty Co. reached a settlement on 22 lawsuits stemming from Hurricane Katrina damage.

“Obviously, we are pleased to settle without costly and lengthy litigation,” said State Farm spokesman Fraser Engerman. He declined to comment further because terms of the settlement are confidential.

Documents and testimony that Bloomington, Ill.-based State Farm produced in previous court cases put clients in a good negotiating position, said William F. “Chip” Merlin, the policyholders’ attorney.

The material from State Farm officials indicated the company decided not to pay claims in areas hit by the storm surge, relying on policy language to deny claims without thorough investigations, Merlin said.

In cases in which wind and water combined to cause a loss, the 5th U.S. Circuit Court of Appeals has ruled policy language precludes coverage.

However, Merlin said last week that does not relieve insurance companies of their duty under Mississippi law to fully investigate the cause of a loss and pay for wind damage covered under an all-perils policy.

State Farm maintains the company investigated each policyholder’s claim and covered independent wind damage.

Information from: The Sun Herald, http://www.sunherald.com.