updated 5/10/2007 6:56:22 PM ET 2007-05-10T22:56:22

State Farm Fire and Casualty Co. has agreed to reopen and possibly pay claims for about 350 policyholders in Louisiana whose homes were destroyed by hurricanes Katrina or Rita, the company announced Thursday.

State Farm patterned its agreement with Louisiana Insurance Commissioner James Donelon after a larger deal that the company reached in Mississippi earlier this year.

The Bloomington, Ill.-based insurer says the deal for Louisiana only applies to about 350 homes where Katrina or Rita left only the foundation of a home. The company says it will reevaluate these claims to see if any damage was caused by the hurricane's wind.

State Farm and other insurers say their policies cover damage from a hurricane's wind but not its rising water, including wind-driven storm surge. Hundreds of homeowners in Louisiana and Mississippi have sued the insurers, accusing them of ignoring wind damage.

In March, State Farm agreed to pay at least $50 million to roughly 35,000 policyholders in southern Mississippi who can have their claims for wind damage reopened and possibly paid.

State Farm didn't specify a minimum payment for all Louisiana claims.

"This will help people answer their remaining questions, move on with their lives and rebuild Louisiana," company spokesman Jeff McCollum said.

Donelon said disputed claims in these cases are among the most difficult to resolve because the storm wiped away evidence of wind or water damage. Although State Farm didn't specify a minimum payment for all 350 claims, Donelon said he expects each policyholder to collect thousands of dollars.

"Louisiana claimants are being treated the same as Mississippi claimants," he said.

Next Thursday, State Farm plans to begin mailing letters explaining the agreement to the 350 eligible policyholders. The company says claims will be reviewed within 90 days of a policyholder notifying State Farm that they want to participate.

Nearly half of the 350 claims are in Cameron Parish, near the Texas state line, where Rita hit about a month after Katrina.

McCollum said the agreement includes policyholders who have sued State Farm over Katrina or Rita damage, but not if they already have settled their suit.

Also excluded from the deal are policies with wind exclusion and properties that only were covered by a flood policy.

McCollum said State Farm is trying to reach a separate settlement with about 150 policyholders in Cameron Parish who sued the company over Rita damage.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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