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Gulf Coast Homeowners File Class Action against State Farm

January 9, 2006

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A Biloxi attorney and homeowners along the Gulf Coast area have filed a class action law suit against State Farm Insurance Company, alleging the company has refused to pay for hurricane damage to their homes, even though the plaintiffs purchased "all perils" homeowner insurance.

Attorney Richard T. Phillips of Batesville filed the class-action lawsuit Wednesday in U.S. District Court in Gulfport on behalf of attorney Judy Guice and homeowners in the area.

The lawsuit contends that State Farm is obligated to fully cover the losses of everyone named in the suit who purchased the all perils policy. State Farm denied coverage under Guice's homeowner's policy, citing an exclusion for water damage that includes tidal surge.

But Guise argues that the policy is worded so that all damage is covered unless it would have occurred "only" as a result of the tidal surge. Wind damage is a covered peril and since it contributed to the damage of the home it should be covered, the suit alleges.

It's not the only suit State Farm faces as a result of Hurricane Katrina. Sen. Trent Lott (R-Miss.) is also among homeowners suing the company. The law office of Lott's brother-in-law, high-profile plaintiff's attorney Richard "Dickie" Scruggs, filed the federal lawsuit on Lott's behalf.

Lott and Scruggs both lost their beachfront Pascagoula homes to the Aug. 29 storm.

The argument in both cases is whether a wind-driven storm surge is the same as flooding. Insurers say they shouldn't have to pay for water damage for those who did not have flood policies. The homeowners say wind-driven water is a secondary consequence of wind, which is covered in homeowners' policies.

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