Verdict Alert - $2.8 Million Awarded Against Allstate Insurance Company

Yesteray a federal jury in Louisiana awarded $2.8 million in damages and penalties against Allstate Insurance Company in the second federal lawsuit to go to trial involving Louisiana homeowners affected by Hurricane Katrina.

Robert and Merryl Weiss sued Allstate for bad faith, claiming the insurance carrier intentionally underpaid them for the structural damage to their home. Like sensible homeowners, the Weisses had an Allstate homeowners policy with limits of $343,000 for the home and $240,100 for personal property.

After the hurricane wiped our their home, they believed Allstate would live up to its promises to help them recover and cover their losses. Allstate generously paid them a whopping $29,483 for the damage to the home and $14,787 for living expenses.

Allstate justified its behavior by arguing that most of the damage actually had been caused by the hurricane’s storm surge and thus was not covered under the Weiss’ policy.

There was just one problem: the Weiss’ home was too high above sea level to have been destroyed by Katrina’s storm surge. As their lawyer pointed out, the house was 17 feet above sea level; engineering data indicated only 14 feet of surge hit the area.

Allstate’s own witnesses supported this conclusion. Jim Neva, a surveyor and engineer who inspected the Weiss’ home for Allstate, initially told Mr. Weiss that wind may have destroyed the home before the surge of water hit.

Neva later changed his story, deffering to an Allstate engineering “consultant” who convinced Neva that the storm surge had destroyed the house. But Allstate had another problem: their paid consultant never personally inspected the property until after he wrote the report.

Allstate also tried the ‘ol “the best defense is a good offense” trick - claiming the Weisses misrepresented part of their claim. The company claimed the couple asked Allstate to pay for a boathouse that was not covered by the policy, arguing that a policyholder who misrepresents even part of a claim voids all coverage.

The jury saw through Allstate’s tricks. They rejected Allstate’s “defense” and found that the damage had been caused by wind and therefore was covered under the policy. A $1.5 million penalty was assessed for Allstate’s delayed payment of the claim.

Justice and common sense prevail.

For more on this story here.