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State Farm settlement a chance to repair image


WE APPLAUD State Farm Fire & Casualty Co.'s agreement to settle a closely watched lawsuit over Hurricane Katrina claims, even though a federal judge rejected the settlement last Friday.

Mississippi Attorney General Jim Hood sued State Farm and other insurers, seeking to compel them to pay for damage from Katrina's huge storm surge. Insurers balked, citing policy exclusions. For the thousands of homeowners who lost their homes, the distinction between wind and water as the proximate cause of loss was meaningless, if they even understood it.

Without insurance recoveries, most of these unfortunate people could never hope to rebuild. While denying surge claims, the industry earned fierce criticism. Unfairly so, as most of the storm claims were paid quickly and fully, enabling the majority of insured Katrina victims to begin the long recovery process.

While we do not support rewriting insurance contracts, disasters such as Katrina afford the industry a chance to help repair its image and educate policyholders. No matter what happens with State Farm's settlement, we hope insurers have learned a lesson.