BILOXI, MS (WLOX) - Attorney General Jim Hood announced a settlement Wednesday in the state's breach of contract suit against State Farm. The suit was filed after State Farm refused to comply with a January 2007 Hinds County Chancery Court settlement.
As a result, State Farm has paid at least an additional $74 million to coast policy holders. In addition, Nationwide Insurance has paid out an additional $40 million to its policy holders.
State Farm will also send out new notices to the remaining 148 slab and/or pier only policyholders, who have not yet sued, settled or already participated in the reevaluation process.
Attorney General Hood stated, "Under the terms of the original settlement, which required supervision of the federal district court, a lot more money would have been paid out, because the panel of arbiters would have been chosen evenly by the plaintiffs and State Farm. Under the Mississippi Insurance Department reevaluation program, there were no arbiters. When we entered into the original agreement, our Office estimated that the arbiters would make State Farm pay between the minimum of $50 million and $400 million. Nevertheless, the additional $74 million paid by State Farm pursuant to the Mississippi Department of Insurance reevaluation program apparently meets the minimum payments required under our original state court settlement agreement."
This settlement agreement includes additional benefits for the remaining slab/pier only policyholders, who were eligible to have their claims reevaluated, but have not done so. State Farm has agreed to send these 148 policyholders new notices that will inform them how they can still participate in the reevaluation process, if the policyholder submits the enclosed reevaluation form postmarked by August 29, 2008.
In accordance with the Attorney General's original agreement with State Farm, these offers are guaranteed to total no less than 50 percent of Coverage A limits, subject to policy limits and prior payments.