[JURIST] A Mississippi jury Wednesday held the State Farm [corporate website] insurance company liable for $2.5 million dollars in punitive damages after US District Court Judge L.T. Senter Jr. issued an unexpected directed verdict calling on the company to pay $223,292 for rejecting a claim brought in the wake of Hurricane Katrina [JURIST news archive]. Senter ruled that State Farm had to pay the policy limits on a Mississippi home that was damaged during the storm, finding it had not met the burden of proof required by Mississippi law to challenge the policyholders' claim that their home was damaged by wind preceding the hurricane, not water from the storm surge. The State Farm policy at issue categorically excludes any damage caused through negligence; the storm surge of Hurricane Katrina is thought to have resulted from negligent engineering of the levees. AP has more. The Sun-Herald has local coverage.

In the first Katrina-related insurance lawsuit to go to trial, a federal judge in Mississippi ruled in August that Nationwide Insurance was not obligated to cover a policyholder's claims [JURIST report] for water damage caused by the hurricane. In November, a federal judge held [JURIST report; opinion] that flood damage caused by Katrina may be covered under those insurance policies that do not specifically exclude from coverage damage caused by negligence. Attorney General of Mississippi Jim Hood has repeatedly called for a statewide settlement [press release, PDF] between all in-state policyholders and the insurance companies, including State Farm, Allstate, and Nationwide [corporate websites]. Browse Hurricane Katrina Insurance Orders and Opinions via the US District Court for the Southern District of Mississippi [court website].