Biloxi, Miss. Two sisters who handled Hurricane Katrina claims for State Farm have turned over records to federal and state investigators because they say the company purposely underpaid or denied coverage for wind damage.
Cori and Kerri Rigsby believe State Farm Fire & Casualty Co. wanted to write off as much damage as possible to the hurricane's unprecedented storm surge covered under the National Flood Insurance Program.
Wind damage covered under State Farm homeowner policies was minimized, they say, through the use of biased or altered engineers' reports that attributed all or most damage to surge.
The company hoped to further benefit from policy language that says wind damage is not covered when water contributes.
"This thing hit and they went into panic mode," said Kerri Rigsby, who now serves as a consultant, along with her sister, to a group of lawyers suing insurance companies over Katrina claims. "They thought, 'If we have to go in and pay these claims, it's going to be billions. And we just can't do that.' And I think they truly believed it was water and they were going to make sure that's how it went."
State Farm representatives in Bloomington, Ill., the home office, say what the women describe would be contrary to the company's claims practices.
"We have retained a third party to conduct an extensive review of Katrina, which would include interviews of these persons," spokesman Dick Luedke said. "Unfortunately, their lawyers haven't allowed our investigation team to meet with them."
James Shortley, claims manager for the National Flood Insurance Program, said his agency has found no evidence that State Farm or other insurers overcharged the government.