Insurance and Finance Update - Friday, October 27, 2006 11:55 - 0 Comments

More On State Farm and Katrina-Related Litigation

There has been a great deal of activity concerning lawsuits pending against State Farm Insurance Co. arising out of Katrina and related matters. I will mention two of the more important events below.

COMPANY SUES STATE FARM WHISTLE BLOWERS

In our last issue, we wrote on the activities of the Rigsby sisters. Now, a company that contracts with State Farm Insurance has sued the two former employees who are helping to build cases against the insurer for denying claims after Hurricane Katrina. E-A Renfroe and Company, a Birmingham-based insurance adjusting firm, alleges in its lawsuit that Cori and Kerri Rigsby broke the law when they turned over reams of internal State Farm records to lawyers who represent State Farm policyholders.

As you will recall from our previous issue, the Rigsby sisters were assigned by Renfroe to help adjust claims for State Farm. According to the sisters, the documents show that State Farm manipulated engineers’ reports on storm-damaged homes so that policyholders’ claims could be denied. The sisters have resigned from Renfroe. The Rigsbys turned over copies of the documents in question to state and federal authorities. Renfroe’s lawsuit, filed earlier this month in a federal court in Birmingham, Alabama, accuses the sisters of violating the Alabama Trade Secrets Act and breaching confidentiality agreements with the company.

Lawyers for the policyholder plaintiffs hope to prove that State Farm management elected to deny all policyholder claims where Katrina left only slabs or pilings. In denying slab claims, the company has relied on policy exclusions that say water damage is not covered. State Farm is also claiming that there is no coverage for wind damage when water contributes to the damages. State Farm’s officials contended that the company individually investigated each claim and paid for damage covered under its policies. The first Hurricane Katrina cases to be tried in U.S. District Court in Gulfport will, at the judge’s direction, involve wind versus water claims against State Farm, Nationwide, and Allstate insurance companies. Six cases have been scheduled, two involving each company, to begin January 29th of next year.

Source: Associated Press