669 Gulf Coast homeowners file suit against State Farm
Belleville News-Democrat (IL)
May 10, 2006
A lawsuit filed Tuesday by more than 650 Gulf Coast homeowners accuses State Farm Insurance Co. of using a "one-size-fits-all" engineering report as the basis for refusing to cover damage to homes destroyed by Hurricane Katrina.
The lawsuit alleges that the Bloomington, Ill.-based insurer denied many of the homeowners' claims without investigating whether Katrina's wind or water was responsible for damage to their homes.
Instead, the lawsuit claims, an engineering firm hired by State Farm drafted a generic, "one-size-fits-all" report that concludes all damage to homes on Mississippi's Gulf Coast was caused by "storm surge" and not hurricane-force winds.
State Farm's policies cover wind damage, but storm surge is considered flood water and is excluded from coverage.
The report, which Dallas-based HAAG Engineering Co. prepared for State Farm, is "patently biased" because it concludes that Katrina's storm surge arrived before its wind could do any damage, the lawsuit argues.
"State Farm nonetheless referred to this report as the 'Bible,' and expected and coerced all of its adjusters and engineers ... to reach conclusions consistent with the HAAG report," the lawsuit alleges.
State Farm spokesman Phil Supple said he couldn't immediately respond to the lawsuit's allegations because he hadn't reviewed it.
HAAG spokesman David Margulies dismissed the allegations as part of a "litigation strategy" and said the engineering firm "has a long history of providing unbiased information."
Richard "Dickie" Scruggs, a high-profile lawyer who is suing four other insurance companies for denying claims after Katrina, sued in federal court on behalf of 669 State Farm policyholders.
Scruggs claims many of the State Farm adjusters who inspected homes in Katrina's early aftermath told homeowners that wind damaged their houses hours before any water from the Mississippi Sound surged onto land.
But the insurer rejected their findings and fired, transferred or reassigned many of those adjusters, the lawsuit alleges.
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