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Insurer loses $2.7m in Katrina suit

Ruling may benefit other homeowners

A jury awarded $2.5 million in punitive damages after State Farm refused to pay anything to a couple who lost their home in Hurricane Katrina. The ruling could set a precedent and affect hundreds of other cases. (m. spencer green/associated press/file 2005)

GULFPORT, Miss. -- A jury yesterday awarded $2.5 million in punitive damages to a couple who sued State Farm Fire & Casualty Co. for denying their claim after Hurricane Katrina, a decision that could benefit hundreds of other homeowners challenging insurers for refusing to cover billions of dollars in storm damage.

A federal judge only hours earlier had taken part of the case out of jurors' hands before they awarded punitive damages to State Farm policyholders Norman and Genevieve Broussard.

US District Judge L.T. Senter Jr. ruled in the morning that State Farm is liable for $223,292 in damage caused by Hurricane Katrina to the Broussards' home. Senter left it to a jury to decide whether to award punitive damages.

Senter's decision to make a directed verdict appeared to surprise everyone in the courtroom. After he explained his ruling, Senter ordered a recess to give attorneys time "to get over the shock."

After the jury disclosed its award, the Broussards left the courthouse arm in arm. "It's a great day for South Mississippi," Norman Broussard said.

The Broussards sued State Farm for refusing to pay for any damage to their home, which Katrina reduced to a slab. The couple, who wanted State Farm to pay for the full insured value of their home plus $5 million in punitive damages, said a tornado during the hurricane destroyed their home. State Farm blamed all the damage on Katrina's storm surge.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both .

Senter, however, ruled that State Farm couldn't prove that Katrina's storm surge was responsible for all of the damage to the Broussards' home. The judge also said the testimony failed to establish how much damage was caused by wind and how much resulted from storm surge.

State Farm spokesman Phil Supple said the company is likely to appeal .