Katrina Trial Begins

Mike Simon

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The first trial of over 4,000 federal lawsuits filed in Louisiana against insurers arising out of Hurricane Katrina began on February 12.

The lawsuit against Allstate Indemnity Company alleges "bad faith" against the insurer. The plaintiffs allege that Allstate failed to promptly or properly adjust their insurance claim, and underpaid them for wind damage sustained in the storm.

Last month a jury in Mississippi awarded $2.5 million in punitive damages in favor of a Biloxi couple against State Farm Fire & Casualty Company. The Court later reduced the award to $1 million.

State Farm has also agreed to pay about $80 million to settle lawsuits by 640 policyholders in Mississippi and pay at least an additional $50 million to thousands of policyholders who have not filed suit.