Homeowners in Katrina lawsuits get paid

updated 8:07 a.m. ET Feb. 7, 2007

More than 100 Mississippi policyholders who sued State Farm Insurance Cos. for refusing to cover damage from Hurricane Katrina have been paid this week as part of a multimillion dollar settlement with the insurer, attorneys for the homeowners said.

State Farm agreed last month to pay about $80 million to settle lawsuits filed by 640 policyholders whose claims were denied after the Aug. 29, 2005, storm that destroyed tens of thousands of homes on Mississippi's Gulf Coast.

Richard "Dickie" Scruggs, an attorney whose legal team represents all 640 of the policyholders, said Tuesday that more than 100 of his clients have received checks this week. The rest are expected to be paid by the end of next week.

"It's incredibly rewarding," Scruggs said. "This is something I wish I could do for the whole Gulf Coast."

Max and Linda Ingram, who moved north to Carthage, Miss., after Katrina leveled their beach-front home in Ocean Springs, drove down Monday to pick up their check and sign the paperwork necessary to settle their lawsuit.

"It felt like justice had been served," Max Ingram said. "I just wish all of the policyholders could experience the same thing. The coast can't rebuild if the insurance companies don't pay."

State Farm had denied the Ingrams' entire claim, blaming the damage to their home on Katrina's storm surge. The Bloomington, Ill.-based company and other insurers say their policies cover damage from a hurricane's wind but not from its rising water, including wind-driven surge.

Max Ingram, 70, said the terms of his settlement are confidential, but he noted that his share of the money will allow him to finish building a new home in Carthage.

"I didn't want anything more than what they owed me, and I didn't want anything less," he said.

Sen. Trent Lott, R-Miss., and Rep. Gene Taylor, D-Miss., are among the policyholders settling with State Farm. Both had homes destroyed on the coast. Scruggs said neither has been paid yet, but he added, "I don't expect any trouble with that."

State Farm's settlement with Scruggs' clients and Mississippi Attorney General Jim Hood also resolves a lawsuit that Hood filed against the company. Hood agreed to drop State Farm from the lawsuit and end a criminal investigation of the company's post-Katrina claims practices.

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