Released: May 10, 2007

Commissioner of Insurance Jim Donelon said today that State Farm has agreed to his request to reevaluate all of the claims it denied from Louisiana policyholders whose homes or businesses were reduced to their foundations due to damage caused by Hurricane Katrina or Hurricane Rita.

The settlement calls for State Farm to pay the approximately 350 affected policyholders the equivalent of 50% of their Coverage A limits, which covers the structure, minus any prior payments from the company, including flood payments.

At issue is whether or not these structures were blown down by hurricane winds or washed away by storm surge, leaving only the foundation, or slab. Typically, homeowners insurance policies do not cover losses due to storm surge. However, many of these insureds say their property was destroyed by hurricane winds that preceded the storm surge. State Farm claims these structures were leveled by storm surge.

Donelon said State Farm will mail a resolution form on May 17 to affected policyholders outlining the parameters of the reevaluation program. Policyholders who want their claim reopened should return the resolution form to the company, even if they have received some form of payment from State Farm or through their flood insurance policy. Eligible participants also include policyholders with slab claims who took part in the Louisiana Department of Insurance Hurricane Mediation Program and those currently involved in litigation with State Farm.

"The process requires State Farm to have all claims reevaluated within 60 to 90 days," said Commissioner Donelon. Donelon said he will monitor State Farm's actions under the program to ensure Louisiana policyholders obtain the agreed upon relief.

The reevaluation process does not include policies with a wind exclusion, property covered by a flood policy only or those who filed suit against State Farm and already reached a settlement.