State Farm must pay $2.5M in Katrina case

Mississippi jury orders punitive damages paid to couple whose claim was denied after their home was destroyed by hurricane.

NEW YORK (CNN) -- A Mississippi jury has ordered State Farm to pay $2.5 million in punitive damages to a Biloxi couple whose house was destroyed during Hurricane Katrina, according to a spokesman in the office of the judge who presided over the case.

State Farm had initially denied Norman and Genevieve Broussard's insurance claim.

The award could have major implications for other insurers who are being sued for damages in connection with the storm, which caused more than $38 billion of insured damages in August 2005, according to Reuters.

Earlier in the day, Judge L. T. Senter Jr. determined that the plaintiffs were entitled to policy benefits for the loss of their home and its contents in the amount of nearly $225,000, the spokesman said.

The decision could set the tone for future Katrina cases in Judge Senter's courtroom. The judge has more than 300 Katrina-related insurance cases on the docket, said his spokesman, who did not want his name used. The next case is scheduled to be tried starting Jan. 22, and the trial schedule is expected to pick up in the next few weeks, according to the spokesman.

Flood damage is generally covered by federal, not private, insurers, according to Reuters.

But attorneys for the Mississippi residents whose homes were damaged or destroyed said the destruction was caused by "storm surge," waters that were whipped up by the 135 mile per hour winds, and therefore should be covered by private insurers, who are generally liable for wind damage, according to the news agency.

State Farm said it had not expected the decision.

"We are disappointed and surprised by the court's ruling," a company spokesman remarked. "The expert testimony supported a different result. After the conclusion of the case, we will evaluate our next steps."

The Broussards' lawyer, Jack Denton, said that because he and other lawyers have other Hurricane Katrina insurance cases pending, he cannot comment further on today's ruling other than to say, "We are pleased with today's verdict."

State Farm is owned by its policyholders.

Illinois-based Allstate Corp. (Charts) also has a number of Katrina-related cases pending against it.

An earlier version of the article mistook the couple's last name, Broussard, for their location. regrets the error.

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