In one of the first Katrina insurance cases to go to trial in Louisiana, a jury ordered Allstate to pay the maximum amounts legally allowed in that state as a penalty for having failed to fairly and timely adjust and pay a homeowners’ hurricane damage claim. Allstate was found to have deliberately manipulated the damage report on the property that was prepared for them by the Rimkus engineering firm to make it conclude damage was not covered.
United Policyholders’ volunteer lobbyist Paige Rosato was instrumental along with the Louisiana Association of Justice in getting the 2006 law passed in that state that increased the penalties that can be assessed against insurers for misconduct. Because of that change in the law, the Judge in Weiss v. Allstate instructed the jury that they could double the plaintiff’s damages in calculating the verdict. Allstate failed in its strategy of trying to distract the jury’s attention from its misconduct by blowing up an innocent claim error by the homeowners into an alleged fraud. The jury soundly rejected that strategy.
Allstate Ordered to Pay $2.81 Million in Katrina Case
as posted at www.bloomberg.com
by Erik Holm and Leslie T. Snadowsky
April 17, 2007
(Corrects amount of jury award in headline and first and second paragraphs. Story was originally published April 16.)
April 16 (Bloomberg) — Allstate Corp., losing its first jury verdict over Hurricane Katrina damage, was ordered to pay $2.81 million to a Louisiana homeowner who alleged the insurer manipulated an engineering report to reduce its payment.
A jury in federal court in New Orleans today awarded Robert Weiss of Slidell, Louisiana, $561,600 of the $653,709 he sought for his property, plus $2.25 million for mental anguish and penalties. Allstate, the second-largest home insurer in the state, said it would appeal.
Engineering reports are the key to thousands of insurance disputes because residential policies typically cover damage from winds, not flooding. After Katrina, Allstate paid Weiss about $54,000, citing an engineering report that blamed most of the damage on floodwaters and storm surge.
“Allstate sided with the one engineer who didn't go out to inspect the property,” said Jeffrey Mika of New Orleans, foreman of the eight-member jury. “It didn't feel like Allstate acted in good faith when it came to settling this claim.”
Allstate relied on a report from Craig Rogers, an engineer for Houston-based Rimkus Consulting Group who based his findings on photographs and discussion with a colleague who visited the property. Weiss sued because the colleague, Jim Neva, told the couple tornado winds were the primary cause of damage. Neva testified that Rogers, who was more senior, had convinced him his assessment was probably wrong.
Kate Hollcraft, a spokeswoman for Allstate, said the Northbrook, Illinois-based company was “shocked” by the verdict, which came after about three hours of deliberation.
`Good Faith'
“Allstate believes that it acted in good faith throughout the entire claims process with the Weisses, and we are disappointed that the jury ruled differently,” Hollcraft said. “We will appeal this ruling.”
The jury awarded Weiss the full $411,600 he sought for the home, $150,000 of the $240,100 he sought for its contents and nothing for a boathouse he said was worth $41,160. Allstate covered about $39,000 for partial wind damage and $14,787 in living expenses. The couple also got the full $350,000 they were insured for under their policy with the National Flood Insurance Program, which was created by the government to supplement private coverage.
“When Dr. Weiss bought his Allstate policy he expected security -- the security of knowing when something bad happens, his insurance company will be there,” Richard Trahant, Weiss's attorney, said in closing arguments today. “He didn't get that.”
Engineering reports have come under scrutiny as Congress examines insurers' responses to the 2005 storm, the most costly ever in the U.S.
State Farm
Mississippi Attorney General Jim Hood said a year ago he was investigating whether reports were doctored to reduce insurers' payments. State Farm Mutual Automobile Insurance Co., Allstate's biggest rival, was among the companies he was examining, he said at the time. In January, he said he wouldn't pursue criminal charges against State Farm.
The Weiss lawsuit is the second Katrina case against Allstate to go to a federal jury trial. The first ended before a jury could decide on the matter; the Louisiana plaintiffs withdrew their suit after Allstate alleged they lied to the company.
In Mississippi, jury trials have focused on State Farm, Allstate's biggest rival. State Farm has agreed to consider as many as 35,000 Katrina claims in that state under an agreement with Insurance Commissioner George Dale.
The case is Weiss et al v. Allstate Insurance Co., No. 06-cv- 03774, U.S. Eastern District of Louisiana (New Orleans).
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
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