State Farm Reaches 2nd Agreement to Settle Suits by Katrina Victims

Christina Cole

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State Farm Mutual Auto Insurance Co. said on Wednesday that they have reached an agreement to settle insurance claim disputes with over 600 Mississippi residents who sued for Hurricane Katrina damage.

Previously, State Farm hadn't confirmed the settlement that was publicized on Tuesday by homeowners' attorneys that negotiated a separate agreement that would benefit as many as 35,000 Mississippi families that can cost them as much as $500 million, according to one estimate.

The lawyers, led by Richard Scruggs, said the company will pays as much as $89 million to settle with approximately 640 clients.

"We do have an agreement," said a State Farm Spokesman, who declined further comments on the terms.

Katrina's devastation to the Gulf Coast left room for widespread disputes because insurance policies cover wind-related damage, not flooding. Scruggs lost his own house in Pascagoula and has been representing fellow residents.

State Farm is the largest home and auto insurer in the U.S. Under the company's other agreement, it will reconsider claims in three coastal Mississippi counties hit hardest by Katrina, the company said Tuesday. Both settlements have to be approved by a federal judge.