Hurricane Katrina happened on August 29, 2005, but the legal aftermath continues. This week a federal judge dismissed fraud claims in a Katrina lawsuit against State Farm Fire & Casualty Co.

A couple whose home had been badly damaged by wind and water sued State Farm after that company paid the limit of their flood policy plus $36,000 for wind damage, but blamed the rest of the home’s damage on Katrina’s floodwaters. The homeowner’s policy excluded flood damage.

Through their attorney Richard Scruggs and his partners, the couple charged fraud because they claimed that an Alabama firm used by State Farm for damage assessments had provided two different engineering reports after Katrina. State Farm then underestimated the wind damage on the couple’s home to reduce its liability under the homeowner’s policy.

The judge, Judge Senter, ruled that if this claim were sustained, it would constitute bad faith, but not fraud. The couple may continue their efforts to obtain payment but with a different attorney, as Richard Scruggs has been indicted for attempted bribery in an unrelated Katrina dispute.

It is important to know exactly what your homeowner policy covers. Do read the fine print and ask questions if you are not sure where you stand. If you have sustained property damage through another’s negligence you may have a valid legal claim, so please call us or send an email if you would like to schedule a free consultation.