1:40 p.m.
NEW ORLEANS (AP) — Louisiana’s state-run insurer has agreed to a mass settlement with more than 160 policyholders, a deal believed to be the first of its kind in the state since 2005 hurricanes Katrina and Rita spawned thousands of lawsuits, an attorney for the homeowners said today.
Citizens Property Insurance Corp., Louisiana’s insurer of last resort, has agreed to pay about $6.6 million to 167 policyholders in Cameron Parish who sued Citizens for refusing to cover damage from Rita in September 2005, according to attorney Jennifer Jones.
Ms. Jones said 102 of her clients signed off on their share of the settlement yesterday. She expects at least 20 more policyholders to accept their portion of the deal today. Payments will be made within 30 days, she added.
“I know it doesn’t seem like a lot of money … but I consider it to be a very fair offer in most cases,” she said, noting that some of the homeowners had policy limits as small as $10,000.
Citizens Chief Executive Terry Lisotta confirmed that the company has made settlement offers to Ms. Jones’ clients but said he hasn’t received a final report on the terms.
“We’re working diligently to settle and resolve all claims. Not just hers. Everybody’s,” he said. “We’re stretching out to the finish line.”
Mr. Lisotta said a potential snag in the deal remains to be resolved. Citizens has balked at Ms. Jones’ push for the insurer to refund premiums that her clients have paid since Rita.
“The law says if you have coverage, you have to collect the premiums,” he said.
Ms. Jones said the negotiations over premium refunds are not a “deal-breaker” and are separate from the mass settlement of property claims.
All but a handful of the 167 policyholders included in the settlement are property owners whose homes were reduced to slabs by Rita. Ms. Jones said Citizens was intent on settling slab cases because they are among the most contentious of disputed claims.
“When there’s nothing left there, it’s difficult to prove whether the damage was from wind or water,” said Ms. Jones, who also is an assistant district attorney in Cameron, near the Texas border.
Citizens and other insurers say their homeowner policies cover damage from wind but not from rising water, including wind-driven storm surge. Rita’s storm surge extended for miles inland, damaging or destroying thousands of homes in southwestern Louisiana.
Insurance companies already have reached individual settlements with hundreds of homeowners in Louisiana who sued in the wake of Katrina and Rita, but Citizens’ agreement this week is believed to be the state’s first mass settlement.
Citizens, a quasi-state agency, writes policies for home- and business owners who are unable to buy coverage from private companies. About 2,000 policyholders have sued Citizens over damage from Katrina and Rita.
Please read our comment policy before commenting.