State Farm Acted in Bad Faith Following Katrina

State Farm Acted in Bad Faith Following Katrina

This Tuesday, a bad faith insurance lawsuit was filed on behalf of 669 Mississippi homeowners. This group of residents claims that State Farm Insurance used a “one-size-fits-all” engineering report to unfairly deny their claims after Hurricane Katrina destroyed their homes.

State Farm’s homeowner insurance policies cover wind damage. However, they do not cover storm surge, which is considered floodwater and is not covered by policy. The engineering report, used to deny hundreds of claims, concludes that water surge was the culprit for all the damage to homes on Mississippi’s Gulf Coast.

The lawsuit contends that the report, crafted by HAAG Engineering Co. based in Dallas, TX, is biased. This engineering report states that Katrina’s storm surge arrived before the wind, thus damage to homes could not have been caused by wind. This effectively allows the insurance company to deny the claims of hundreds of people who lost everything in the storm.

According to the lawsuit, State Farm adjusters were coerced into making the same conclusions as the engineering report. Those who rejected these findings were fired, transferred, or reassigned, according to the claim.

Allegedly, many insurance claims adjusters determined that wind damage preceded damage by floodwater in hundreds of cases. Those conclusions and other engineering reports that did not support the HAAG’s conclusions were allegedly destroyed to cover up any evidence that would force State Farm to pay out claims.

Insurance companies have a responsibility to act in good faith and fair dealing. This means they must put the best interests of their claimants above all other interests. While this doesn’t mean blindly accepting all claims, insurance companies have a legal obligation to look for ways to honor claims, as opposed to hunting for ways to deny claims.

The high profile attorney responsible for this lawsuit has also filed lawsuits against four other insurance companies who have allegedly denied claims to Katrina victims in bad faith.

Find a Lawyer Now

Search for a Personal Injury lawyer in your state or province by using the forms to the right.