Posted On: February 16, 2007, 10:45 am CST

Posted By: Bob

The comments from Allstate may be true, but I do not think the two company's policies are worded the same way. Where Allstate may be allowed to afford partial coverage for wind damage when mixed with the Flood peril, State Farm's policy is clear that is not allowed, and mixed perils of these sort are not covered at all for either peril. I suggest buying the Allstate policy as it obviously better in this instance. However, many people bought the State Farm policy, and had to suffer the consequences. . . until they sued to obtain the Allstate style policy coverage.

State Farm appears to have made some errors during Katrina which may or may not have been intentional, but which definately hurt some policyholders. State authorities, who should know better, used these otherwise minor errors to pressure State Farm to allow coverage for homeowners even though their policy specifically forbids coverage. State Farm, realizing the cost to defend the mostly baseless demand for "coverage for all" would be too expensive in legal and public relations costs, is now accepting to pay for these losses.

However State Farm also understands that the authorities knew what was right, but grandstanded for the people to unjustly collect from the big-pocket insurance company. This advocacy by the authorities for wrong over right will mean that State Farm will have to pull out of the area. An insurance company cannot stay in business if have to insure and pay for losses from perils for which they have never collected premiums.

State Farm should have to compensate the people they wronged, intentionally or not. The should not have to pay everyone for mistakes made against a few. They are a mutual company, owned by all of the policyholders, with profits going back to the policyholders. With the onslaught of this suit, all policyholders will suffer with higher premiums, non-renewals, or withdrawal from the market.