State Farm Urged to Settle Potential Bad Faith Insurance Claim

Biloxi, MOA judge in a bad faith insurance case with a wealth of experience in settling insurance claims has urged State Farm to settle an alleged bad faith insurance claim before the matter goes to trial.

Gulfport US District Court Judge L.T. Senter, Jr., who has more than 2400 Katrina insurance settlements to his credit, cautioned attorneys representing State Farm that the insurer should consider settling out of court with a Biloxi policyholder seeking the policy limits for a claim stemming from Hurricane Katrina.

Evidence was presented pertaining to damage at the home of policyholder Reginald Ed Bossier, whose residence was gutted during the storm. Damage extended from the exterior roof and siding to the interior ceiling; insulation hung from the attic and an exterior wall was stripped above the roofline.

According to yesterday's issue of the Biloxi Sun Herald, State Farm originally offered the plaintiff only $2300 in compensation for the damage. The reason: the water line on interior drywall measured 8 feet, which indicated that the tidal surge caused most of the damage to Mr. Bossier's home. As such, argued State Farm, federal flood policies would cover the damage.

Mr. Bossier was made to wait four years before any payment was forthcoming—only to discover that State Farm had acknowledged an error in their calculation of the damage to the roof and siding. The mistake entitled the policyholder to an additional $13,000 and was corrected in January of last year.

Nonetheless, State Farm's position translated to a payout for damages of slightly more than $15,000. The insurer urged the judge to dismiss the trial. Judge Senter in turn urged State Farm attorneys to consider doing the honorable thing and offer Mr. Bossier the actual policy limit of $650,000. If such an offer was not forthcoming, Judge Senter warned, he would consider introducing a second phase to the trial whereby the jury would consider the possibility that State Farm handled the claim in bad faith, thus entitling the policyholder to punitive damages.

A forensic engineer testified that the water line on interior sheetrock measured 3.5 feet, disputing State Farm's claim of an 8-foot water line.

Mr. Bossier's attorneys also presented evidence that State Farm allegedly trained adjusters to deny claims involving wind and water unless independent wind damage could be found to separate portions of the property—language that is not included in the policy.