Allstate Punished by 1.5 Million Dollar Punitive Damages Verdict
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Allstate Insurance Company, a company frequently accused of engaging in "bad faith" insurance claims practices, has again been hit with a large punitive damages verdict for its failure to treat its policy holders fairly.
This latest claim arose out of a hurricane Katrina related lawsuit.
Including punitive damages, Allstate will have to pay its insured (who lost his home to hurricane Katrina) more than 2.8 million dollars in damages.
The merits of the claim depended upon whether the home was destroyed by wind or by flooding. Allstate claimed that its policy did not cover damage from wind. Allstate claimed that most of the damage was caused by flooding, an event it claimed was not covered by its policy.
The jury found that Allstate did not pay the insured homeowner enough money to cover the wind damage to his home.
Allstate had claimed that the winds from hurricane Katrina were not strong enough to do damage to the home.
The insured home was on the north shore of Lake Bontchartrian. The homeowner proved at trial though that the house was too high above sea level to have been destroyed by flooding from hurricane Katrina. There was evidence that the house was seventeen feet above sea level and engineering data proved that only fourteen feet of flooding hit the area.
The homeowner was covered by an Allstate homeowner's policy with limits of $343,000.00 for the dwelling and $240,100.00 for personal property. Allstate had paid only $29,483.00 for structural damage and $14,787.00 for additional living expenses and blamed the rest of the damage on flooding.
One of the factors which may have led to the high punitive damages verdict was that the surveyor and engineer, who inspected the house for Allstate, first told the homeowner and his wife that wind may have destroyed the home. This expert later changed his story and deferred to an engineering consultant who was also hired by Allstate and claimed the damage to the home was caused by flooding. During trial, it was revealed that the consultant had not personally inspected the house until after he wrote the report.
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