On January 10, 2007, a Mississippi jury held the State Farm insurance company liable for $2.5 million dollars in punitive damages. The decision came after US District Court Judge L.T. Senter Jr. issued an unexpected directed verdict ordering the company to pay $223,292 for rejecting a claim brought in the wake of Hurricane Katrina. The State Farm policy at issue categorically excluded any damage caused through negligence, and the storm surge of Hurricane Katrina is thought to have resulted from negligent engineering of the levees. However, Judge Senter later remitted the $2.5 million punitive damage award to $1 million, finding the award excessive at twelve times the amount of economic damages awarded. In April 2008, the US Court of Appeals for the Fifth Circuit reversed and vacated the punitive damages, finding them unwarranted. The court also reversed the district court's grant of judgment as a matter of law in favor of the plaintiffs and remanded the case for a jury to consider whether the home was destroyed by wind or water.
Learn more about the legal aftermath of Hurricane Katrina, and read commentary examining social vulnerability following Hurricane Katrina from JURIST Guest Columnist Jim Chen in Forum.