Lawsuit accuses insurer of using a single report to deny many claims
The Houston Chronicle
GULFPORT, MISS. – A lawsuit filed Tuesday by nearly 700 Gulf Coast homeowners accuses State Farm Insurance Co. of using a “one-size-fits-all” engineering report as the basis for refusing to cover homes destroyed by Hurricane Katrina.
The lawsuit alleges the insurer denied many of the homeowners’ claims without investigating whether Katrina’s wind or water was responsible for damage to their homes.
Instead, the lawsuit claims, an engineering firm hired by State Farm drafted a generic, “one-size-fits-all” report that concludes all damage to homes on Mississippi’s Gulf Coast was caused by “storm surge” and not hurricane-force winds.
State Farm‘s policies cover wind damage, but storm surge is considered flood water and is excluded from coverage.
The report, which Dallas-based HAAG Engineering Co. prepared for State Farm, is “patently biased” because it concludes that Katrina’s storm surge arrived before its wind could do any damage, the lawsuit argues.
Lawyer Richard Scrugg filed the lawsuit in federal court on behalf of 669 policyholders.
State Farm spokesman Phil Supple said the company, which has paid more than $1.1 billion in property claims stemming from Katrina, is “committed to paying what we owe.”
“Although we have not seen the complaint,” he added, “it’s clear that Mr. Scruggs’ characterizations … have no merit.”
HAAG spokesman David Margulies dismissed the allegations as part of a “litigation strategy” and said the firm “has a long history of providing unbiased information.”
“Unfortunately, sometimes people don’t like the experts’ information, so they blame the experts,” he said.
Scruggs claims many of the State Farm adjusters who inspected homes in Katrina’s early aftermath told homeowners that wind damaged their houses hours before any water from the Mississippi Sound surged onto land.
But the insurer rejected their findings and fired, transferred or reassigned many of those adjusters, the lawsuit alleges.
The lawsuit also claims State Farm “extorted” engineering firms by refusing to pay them if their conclusions conflicted with the HAAG report.
