Allstate must pay $2.06M to Louisiana homeowner

Allstate Corp., losing its first jury verdict over Hurricane Katrina damage, has been ordered to pay $2.06 million to a Louisiana homeowner who alleged the insurer manipulated an engineering report to reduce its payment.
A jury in federal court in New Orleans last Monday awarded Robert Weiss of Slidell, La., $561,600 of the $653,709 he sought for his property, plus a $1.5 million penalty. Allstate, the second- largest home insurer in the state, said it would appeal.
Engineering reports are the key to thousands of insurance disputes because residential policies typically cover damage from winds, not flooding. Allstate paid Weiss $54,322, citing an engineering report that blamed most of the damage on floodwaters and storm surge from Katrina.
“Allstate sided with the one engineer who didn’t go out to inspect the property,” said Jeffrey Mika of New Orleans, the jury foreman. “It didn’t feel like Allstate acted in good faith when it came to settling this claim.”
Allstate relied on a report from Craig Rogers, an engineer for Houston-based Rimkus Consulting Group, who based his findings on photographs and discussion with a colleague who visited the property. Weiss sued because the colleague, Jim Neva, told the couple that tornado winds were the primary cause of damage. Neva testified that Rogers, who was more senior, had convinced him his assessment was probably wrong.
Kate Hollcraft, a spokeswoman for Allstate, said the Northbrook, Ill.,-based company was “shocked” by the verdict, which came after about three hours of deliberation.
“Allstate believes that it acted in good faith throughout the entire claims process with the Weisses, and we are disappointed that the jury ruled differently,” Hollcraft said. “We will appeal.”
The jury awarded Weiss the full $411,600 he sought for the home, $150,000 of the $240,100 he sought for its contents and nothing for a boathouse he said was worth $41,160. Allstate covered $39,150 for partial wind damage and about $14,787 in living expenses. The couple also got the full $350,000 they were insured for under their policy with the National Flood Insurance Program, which was created by the government to supplement private coverage.
“When Dr. Weiss bought his Allstate policy, he expected security – the security of knowing when something bad happens, his insurance company will be there,” Richard Trahant, Weiss’s attorney, said in closing arguments. “He didn’t get that.”
Engineering reports have come under scrutiny as Congress examines insurers’ responses to the 2005 storm, the most costly ever in the United States.
Mississippi Attorney General Jim Hood said a year ago that he was investigating whether reports were doctored to reduce insurers’ payments. State Farm Mutual Automobile Insurance Co., Allstate’s biggest rival, was among the companies he was examining, he said at the time. In January, he said he wouldn’t pursue criminal charges against State Farm.
The Weiss lawsuit is the second Katrina case against Allstate to go to a federal jury trial. The first ended before a jury could decide on the matter; the Louisiana plaintiffs withdrew their suit after Allstate alleged they lied to the company.
In Mississippi, jury trials have focused on State Farm, Allstate’s biggest rival. State Farm has agreed to consider as many as 35,000 Katrina claims in that state under an agreement with Insurance Commissioner George Dale.