Mississippi Attorney General Jim Hood has sued State Farm Fire and Casualty Co. for allegedly shifting hundreds of millions of dollars in Hurricane Katrina wind claims to the state by mislabeling them flood claims.
The suit, filed in the Circuit Court of Hinds County, seeks to recover damages for losses that the state suffered as a result of the alleged scheme.
Mississippi established the Homeowner Assistance Program (HAP) after Katrina to provide financial assistance to homeowners whose insurance did not fully cover the damage caused by the storm.
Hood alleges that State Farm “systematically mischaracterized” Katrina wind damage, which its policies covered, as flood damage, which its policies did not cover, thereby “improperly minimizing its own financial burden and forcing that burden instead on to HAP.” In doing so, State Farm caused Mississippi to pay hundreds of millions of dollars that the state otherwise could have allotted to other recovery efforts, according to Hood.
Hood said any funds recovered as a result of the lawsuit will be returned to the state not to homeowners.
“State Farm took advantage of our program by causing HAP to pay for wind losses that State Farm should have covered under its homeowner policies. Remarkably, State Farm and other insurers walked away from Hurricane Katrina and experienced record profits in the years following, while Mississippi continues to suffer,” Hood said in announcing the suit.
State Farm was surprised by the lawsuit. Phil Supple, State Farm’s director of public affairs, provided the following company statement to Insurance Journal in response to Hood’s announcement:
“We are still reviewing the lawsuit filed earlier today, which was not expected considering what we have done in resolving claims as a result of Hurricane Katrina.”
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