State Farm, Mississippi settle lawsuit over Katrina payments

— Mississippi has quietly settled its lawsuit against State Farm Fire and Casualty Co. for allegedly minimizing its Hurricane Katrina payments to policyholders, leaving the state to compensate homeowners. The settlement says the $12 million payment represents “restitution for damage, which was or may have been caused by a violation of law or potential violation of law” on the part of State Farm, which has admitted no liability in its handling of claims from the 2005 storm, The Sun Herald reported. In July, the company, a subsidiary of State Farm Insurance, also agreed to pay the federal government $100 million in restitution over its alleged mishandling of flood insurance claims following Katrina. A jury had already determined that State Farm defrauded the National Flood Insurance Program by charging it $250,000 for flood damage to a Biloxi policyholder’s home when wind caused the loss.