Scruggs Sues Allstate for Denying Katrina Claims

May 15, 2006

Allstate Insurance Co. has been sued for allegedly denying rightful claims of hurricane-damaged homes.

Lawyer Richard Scruggs filed the lawsuit Friday in federal court on behalf of 310 Allstate policyholders allegedly denied payment even though they believed the damage caused by Hurricane Katrina was covered.

On Tuesday, Scruggs filed a federal lawsuit against State Farm Insurance Co. on behalf of 669 policyholders.

He plans to file similar suits next week against Nationwide Mutual Insurance Co. and the United Services Automobile Association.

According to the Allstate suit, which represents one side of the argument, the policyholders notified the company of their losses but ultimately were told the damage fell under the policy's flood exclusion and was not covered.

April Eaton-Robinson, Allstate field corporate relations manager for the Southern Regional Office, told The Sun Herald that she could not comment because she had not seen the suit.

The suit alleges that Allstate adjusters and engineers sent to investigate the cause of damage told policyholders the damage was caused by hurricane wind.

"Allstate expected its adjusters and retained engineering firms to reach conclusions that all of the damage to plaintiff's insured properties was caused by 'storm surge' (which Allstate unilaterally classifies as 'flood' and contends is excluded by the 'flood' exclusion of the subject policy) and not by hurricane wind (which is undisputedly covered under the subject policy)," according to the suit.
In addition to damages covered by their policy, plaintiffs have requested living expenses retroactive to Aug. 29 and unspecified punitive damages, among other things.