First Katrina verdict: state farm must pay $2.5m.

A federal jury has told State Farm Fire & Casualty Co. to pay a Biloxi, Miss., couple $2.5 million for refusing to cover damage to their home caused by Hurricane Katrina, as the insurer works to settle more than 600 similar cases.

The judge in the case additionally ordered the Bloomington, Ill.-based insurer to pay $233,292, the full value of Norman and Genevieve Broussard's home, saying the insurer's handling of their claim was "impermissible" because it gave them no recourse but to file a lawsuit.

"I find the defendant did not have any legal or arguable reason for refusing to pay the plaintiffs' claims," Mississippi U.S. District Judge L.T. Senter Jr. said from the bench, according to a transcript of his remarks.

The Broussards' case is the first federal jury trial to decide how much insurers should pay for Katrina damage out of hundreds of other similar lawsuits now pending against companies such as Allstate Corp. and Nationwide Mutual Insurance Co. At the federal courthouse in Gulfport, Miss., Senter alone has roughly 200 suits on his docket, according to U.S. District Court records.

State Farm spokesman Phil Supple said the insurer is "disappointed and surprised by the court's ruling. The expert testimony supported a different result." Supple said the company would decide on its next steps after the conclusion of the case. In a statement issued shortly after the jury verdict, the company said those next steps "will likely include an appeal."

The Property and Casualty Insurers Association of America downplayed the ruling, saying it didn't necessarily foretell a trend. "We don't think it changes much," said PCI spokesman Jeffrey Brewer. "We think Senter has ruled in a way consistent with how he's ruled in past ... He's making his decisions on a case-by-case basis, and he's looking at the merits of each individual case."

Patrick A. Long, president of the Defense Research Institute, a trade group representing insurance defense attorneys, also warned against reading too much into the outcome of the case. "This was the first case, and so it will get a lot of attention," Long said. "But one case doesn't really tell you where things are going."