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Louisiana Citizens Ins. Settles for $23 in Post-Katrina Dispute

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By Laura Strachan, Esq. on August 25, 2010 7:12 AM

Louisiana Citizens Insurance Corporation has reached a $23 million settlement in post- Hurricane Katrina and Hurricane Rita homeowners dispute, according to Insurance News. The sizeable settlement affects upwards of 10,000 claimants, who argued that the insurance company insufficiently compensated them for storm repairs following the two hurricanes.

Louisiana Citizens Insurance Chief Executive Officer, John Wortman told Insurance News, "We are happy to have this behind us so we can move forward." The insurance company admitted no wrongdoing in the class-action settlement, and Wortman has since stepped down from his position with the company.

Many of the homes ravaged by Hurricane Katrina and Hurricane Rita required extensive repairs, including: roofing, plumbing, electricity, and drywall repair. The class action claimed that Louisiana Citizens Insurance failed to pay for the general-contractor needed to coordinate the work, this overhead and profit typically represents 20% of the total repair bill on a given home. The current class action, which has been certified since 2008, included those policy claims that required three or more specialists to repair the damaged home. The settlement includes recovery for those homeowners that acted as their own general contractor in coordinating their work.

Plaintiff's co-counsel Allan Kranner is quoted by, "We are very pleased. It's an important issue because it underscores that people are entitled to overhead and profit when three or more trades are involved. That's not something that insurance companies are necessarily running around telling people." Hurricane Katrina and Hurricane Rita left more than property damage, unfortunately many of the  legal issues that have arisen as a result of these natural disasters are just now seeing a resolution. 

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