State Farm hit with $2.7M Katrina verdict

GULFPORT, Miss.--A federal jury on Thursday awarded $2.5 million in punitive damages to a Biloxi, Miss., couple who sued State Farm Fire & Casualty Co. for Hurricane Katrina damages hours after a federal judge ruled that the insurer was on the hook for the couple's $233,292 claim.

The Bloomington, Ill.-based insurer originally rejected the couple's claim, arguing that their home's destruction was caused by storm surge, which State Farm said was excluded in their policy. Meanwhile, the couple claimed that a tornado resulting from the storm had destroyed their home, thus making the claim valid.

The couple's attorney could not be reached for comment.

The State Farm spokesman said an appeal is likely and that the insurer is "surprised and disappointed by both the judge's ruling and the amount issued by the jury in the punitive damages."