Lawsuit: Aid program paid claims State Farm wrongly rejected

AP News
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Posted: Apr 21, 2015 7:51 PM

JACKSON, Miss. (AP) — Nearly a decade after Hurricane Katrina ravaged Mississippi's Gulf Coast, state government is suing State Farm Fire and Casualty Co., saying the insurer improperly denied homeowners' claims and allowed a state aid program to pay instead.

Attorney General Jim Hood filed the civil fraud suit Tuesday in Hinds County Circuit Court, saying Mississippi paid as much as $522 million to State Farm policyholders under the federally funded Homeowners Assistance Program.

The new suit builds on allegations against State Farm in a federal suit by the Rigsby sisters, who claim State Farm pressured engineers to rule that damage was caused by floodwaters instead of wind. State Farm's policies cover wind, but not flood. The Rigsbys won that case, but it's being appealed.

A State Farm spokesman expressed surprise at the suit.