updated 4/9/2007 1:24:19 PM ET 2007-04-09T17:24:19

An eight-member federal jury was seated Monday to hear a Louisiana couple’s claim that they were paid too little by Allstate Insurance Co. after Hurricane Katrina demolished their home in 2005.

Robert and Merryl Weiss were paid hundreds of thousands of dollars by the insurance company but say it isn’t enough. Theirs is believed to be only the second Katrina homeowners insurance case to be tried so far in a Louisiana federal court.

Allstate and other insurers say their policies cover a hurricane’s wind but not its rising water. Hundreds of homeowners in Louisiana and Mississippi have sued their insurers for refusing to cover billions of dollars in damage from Katrina’s storm surge.

The Weisses blame Katrina’s winds and possibly a storm-spawned tornado for demolishing their home in Slidell, northeast of New Orleans. But Allstate concluded that the hurricane’s storm surge was responsible for most of the damage.

The couple had a federal flood insurance policy and a separate Allstate homeowner’s policy with limits of $343,000 for the dwelling and $240,100 for personal property.

Allstate paid the Weisses $350,000 for coverage under their flood policy but only $29,483 for structural damage to their home and $14,787 for additional living expenses under their homeowner policy.

The Weisses, however, say at least two of their neighbors were paid the full limits of their Allstate policies after Katrina destroyed their homes. The couple accuses Allstate of bad faith for not paying their own claim in full.

In court papers, Allstate attorney Judy Barrasso accuses the couple of misrepresenting their claim by demanding that the company pay them at least $34,000 for a boathouse that Allstate says wasn’t located on the insured property when Katrina hit on Aug. 29, 2005.

Northbrook, Ill.-based Allstate used the same defense tactic in February, during the first federal trial for a Louisiana homeowner’s Katrina insurance suit. That trial ended abruptly when the plaintiffs dropped their lawsuit amid allegations they misrepresented their claim.

The Weisses say an Allstate adjuster told them in October 2005 that Katrina’s winds destroyed their waterfront home on the north side of Lake Pontchartrain before storm surge washed away its remnants. Months later, however, the couple received a report from Allstate-contracted engineers that blamed storm surge for the home’s destruction.

Rimkus Consulting Group. Inc. prepared the engineering report on the Weisses’ home. Richard Trahant, one of the couple’s attorneys, accused Rimkus of altering reports on storm-damaged homes so that claims could be denied and the company could generate more business with insurers.

“Rimkus engaged in a pattern of doing this,” Trahant said Thursday during a pretrial hearing before U.S. District Judge Sarah Vance.

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