Insurer loses Katrina payout case

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An insurance company must pay for damage caused to a couple's home by Hurricane Katrina, a judge has ruled.

The decision could benefit hundreds of householders challenging insurers who have refused to cover damage that occurred during the disaster.

State Farm Fire & Casualty, which denied responsibility, must pay the couple $223,000 (£114,691) a judge at the Mississippi federal court said.

A jury later awarded the victims another $2.5m in punitive damages.

'Huge verdict'

Norman and Genevieve Broussard claimed that the tornado which damaged their home in Biloxi, Mississippi was part of Katrina's storm surge in August 2005.

But State Farm argued that while its polices cover damage from wind, claims arising from water damage would not be paid.

It and other firms have insisted that policies offered no cover for damage that may have been caused by a combination of both wind and rain - even if the Hurricane strength winds came before the flooding from the storm.

State Farm said it was "surprised and disappointed" by the ruling and would consider an appeal.

Earlier rulings in Katrina cases, have supported the insurance companies but the decision by District Judge LT Senter leads to questions over other firm's refusal to settle claims.

Philadelphia-based lawyer, Randy Maniloff, who represents insurers described the ruling as a "huge verdict" for homeowners.

Some 1,300 people were killed and thousands were - and remain - displaced after Hurricane Katrina.

Estimates suggest insurance firms may end up paying out up to $60bn in connection with the disaster.