State Farm Fire & Casualty Co. agreed yesterday to settle hundreds of lawsuits by policyholders and reopen and pay thousands of other disputed claims, a landmark deal potentially worth hundreds of millions of dollars for Mississippi homeowners devastated by Hurricane Katrina.
The settlement calls for State Farm to pay about $80 million to more than 600 policyholders who sued the company for refusing to cover damage from the Aug. 29, 2005, storm. State Farm also agreed to pay at least $50 million -- but possibly hundreds of millions more -- to thousands of Mississippi policyholders whose claims were denied but didn't sue the company.
State Farm's agreement with Mississippi Attorney General Jim Hood and lawyers for the more than 600 policyholders resolves a civil lawsuit that Hood filed against the company for refusing to cover damage from Katrina's storm surge.
The accord also resolves Hood's criminal probe of allegations that the Bloomington, Ill.-based insurer fraudulently denied claims after the August 2005 storm.
"It's been like a death roll with an alligator for the last two months in these negotiations," Hood said yesterday .
Mississippi's mass settlement does not involve any claims in other states.
The deal was expected to be presented to US District Judge L.T. Senter Jr. in Gulfport yesterday. Senter must sign off on the settlement.
State Farm and other insurers paid for Katrina's wind damage, but Hood and hundreds of policyholders sued the companies over their refusal to pay for more than $2 billion in damage from the storm's wind-driven surge.