State Farm Charged in Hurricane Katrina Claim Fraud Case

When you think of fraud, you generally think about some scum hiding behind a keyboard somewhere in a dark basement. The last thing that would come to mind would be your insurance company. State Farm Insurance has been charged with fraud in a case out of Mississippi. In the wake of horrible Hurricane Katrina, State Farm is accused of burying, modifying and hiding damage reports to keep from having to pay.

The whole idea of insurance in a hurricane becomes difficult to sort through. The general idea is that an insurance company is often on the hook for wind damage whereas the water damage is paid out federally. In this case, the National Flood Insurance Program was to be reimbursed a quarter of a million dollars due to the accused fraud.

How tough must that be? How in the world do you separate wind and water damage in a storm the size of Katrina? Some houses were blown away while others were ripped from their foundations by rising tide waters. The insurance companies had plenty of motives to aim the destruction towards the waters. They knew they were facing huge debts regardless so a culture of deception is not really all that surprising. In a world where looters take advantage of people whose homes are devastated, nothing really surprises us anymore.

It was first brought to light in 06 when ABC News spoke with two sisters that accused the company of an entire culture of fraud around the locations in Biloxi and Gulfport. They accused the management of instructing the workers to get rid of evidence.

It is really quite amazing that a company the size of State Farm could be accused of such atrocities. When you consider the massive losses that everyone took with Hurricane Katrina, the chances of someone cheating surely was increased. Insurance companies were leveled every bit as hard as homeowners. Hurricane Katrina literally blew away 90 percent of the buildings on the Mississippi coastline and their were over 1.7 million claims. Imagine the strain that put on adjusters.

This by no means justifies the fraud of anyone. Crime is crime and you should be held accountable regardless of the size of your company or depth of your pockets. It remains to be seen whether the company will see other repercussions or claims in light of this news. My guess is that this could open the floodgates for homeowners that were not fairly compensated the first time around.


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