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A Louisiana jury recently decided that homeowners who lost everything during Hurricane Katrina were entitled to insurance coverage from State Farm Insurance Company. It was the first federal trial in Louisiana against the insurer.
The case
The plaintiffs in the case were a Louisiana couple whose home was destroyed by wind damage and flooding during Hurricane Katrina in 2005. The couple contacted their State Farm homeowners’ insurance adjuster who inspected what little was left of the home and decided that the damage was primarily caused by wind first, so the couple would be covered.
Unfortunately, another State Farm adjuster visited them two months later, re-inspected their home and denied their claim stating that the damage was caused by flood waters had caused the damage, so they were not covered. Confused, the couple then hired their own adjuster who agreed with the first assessment – that the damage was caused by wind. They sued State Farm for bad faith.
The decision
Although the couple sued State Farm for approximately $2 million, the jury only awarded them about $200,000 plus $150,000 in penalties because State Farm did not adjust their claim as it should have. It may not be a financial landslide for the couple; however, the decision may prompt State Farm to settle other, similar claims quickly or face bad faith insurance lawsuits.
What is bad faith?
Bad faith occurs when an insurer wrongfully denies a valid claim, simply ignores a claim or refuses to pay the full amount of a claim that is rightfully due the policyholder. Insurers will often point to a vague statement in a policy, deny coverage and hope that the policyholder will simply accept their determination and go away.
Lawyers whose practices focus on bad faith insurance litigation know how these insurance companies operate, understand how insurance policies are written and can assist policyholders in collecting policy proceeds that are rightfully theirs.
If your insurance company has acted in bad faith, you can contact an attorney near you for a free consultation by clicking here.
