State Farm Wins One, Loses One in Wind vs. Water Cases

A federal jury in New Orleans in early November sided with a south Louisiana couple who sued State Farm Insurance Cos. over damage to their property from Hurricane Katrina. Around the same time, a U.S. appeals court favored the company in a case involving a couple whose Mississippi home was destroyed during the massive 2005 hurricane. Both cases centered on to what extent, if any, the insurer was obligated to pay for claims in which both wind and water appeared to have caused extensive damage.

In the Louisiana case the jury was asked to decide whether wind or floodwater was responsible for demolishing Michael and Judy Kodrins’ home in Port Sulphur. It was the first such case against State Farm in Louisiana to be tried in federal court.

The Mississippi case was an appeal of an earlier federal court ruling, which had found the insurer’s water exclusion policy language to be ambiguous.

La.: Wind Was Cause

The Kodrins claimed Katrina’s winds destroyed their house before water topped a nearby river levee and flooded their Plaquemines Parish neighborhood. State Farm’s homeowner policies cover damage from wind but not rising water. The insurer concluded storm surge destroyed the house and denied the claim.

The award in the Kodrin’s case is expected to be about $350,000 — around $200,000 for wind damage, the maximum allowed by their homeowners policy, plus about $150,000 in penalties against State Farm for failing to adjust their claim in a timely fashion, the Associated Press reported. U.S. District Judge Carl Barbier, who presided over the trial, did not immediately issue a finding, preferring to wait and calculate the total. According to the AP the company is considering an appeal.

Miss.: Language Unambiguous

State Farm refused John and Claire Tuepker’s claim for the destruction of their Long Beach, Miss., home by Hurricane Katrina in August 2005. The couple had a valid homeowners’ policy with State Farm at the time.

When State Farm denied their claim, the Tuepkers filed suit on Nov. 21, 2005. State Farm filed a motion in December 2005 to dismiss the complaint citing an anti-concurrent causation clause in its policy. U.S. District Judge L.T. Senter Jr., in Gulfport, Miss., subsequently ruled the clause is ambiguous and unenforceable.

State Farm argued that the policy’s anti-concurrent causation clause is not ambiguous — in this case, coverage of wind damage but not water damage associated with wind — because it cannot be construed to have two or more reasonable meanings and it does not conflict with any other provisions in the policy. The 5th U.S. Circuit Court of Appeals agreed and overturned Judge Senter’s previous decision.

Insurance Journal Staff Writer Brian Kern and Associated Press reports contributed to this story.