State Farm Insurance Vows Not to Renew Policies of Some Gulf Coast Homeowners

State Farm Insurance Cos. says it won't renew homeowners policies within 1,000 feet of the beach on the Mississippi Gulf Coast, an area devastated by Hurricane Katrina in 2005.

Company spokesman Jonathan Freed said Wednesday that State Farm "will not do anything until after hurricane season is over" Nov. 30 and no policies will be canceled immediately.

Freed said no more than 892 policy holders would be affected by the 1,000-foot limit. However, Freed said, about 4,000 more customers living between 1,000 feet and 2,500 feet of the water won't have their wind coverage renewed.

Mississippi Insurance Commissioner Mike Chaney said he has been working with other major carriers.

"We feel certain and confident that those homeowners ... will be able to get coverage," Chaney said.

Rates for many of them will actually decrease with the new insurers, Chaney said.

Freed said the company is limiting its risk in Mississippi as "part of State Farm's ongoing effort to responsibly manage growth and maintain the financial stability that our customers expect and deserve."

Following a high-profile legal battle with Attorney General Jim Hood, State Farm stopped writing new policies in Mississippi in February 2007, saying the state's "legal and political environment is simply untenable."

A spokeswoman for Hood said he wanted to review a State Farm letter before commenting.

In its letter Wednesday to Chaney, State Farm echoed its earlier concerns.

"As you are aware, State Farm continues to have serious concerns about the legal environment in Mississippi and its impact on the Mississippi property insurance market," the letter said. It noted that Hood "filed a civil suit less than 20 days after Hurricane Katrina struck."

After pursuing a criminal investigation, Hood worked out an agreement with State Farm in January 2007 calling for an end to the criminal probe and for State Farm to pay millions more in claims. When a federal judge refused to sign off on the deal, State Farm reached a similar agreement with then-Insurance Commissioner George Dale. Dale left office in late 2007.

Hood began another criminal investigation, this time claiming the company ripped off the National Flood Insurance Program.

State Farm sued Hood in September 2007 in federal court after receiving a grand jury subpoena. The company claimed Hood violated the terms of the January 2007 agreement to end his investigation. State Farm and Hood eventually settled the lawsuit. Neither side has disclosed the terms of that agreement.

State Farm had claimed in court papers that Hood and high-profile tort attorney Richard "Dickie" Scruggs were conspirators in an "extortion conspiracy" in which Hood allegedly used the threat of criminal charges to force civil settlements.

Hood denies the allegations. Scruggs has since been convicted in a bribery conspiracy case in an unrelated dispute over $26.5 million in legal fees he won by suing State Farm over Katrina damages.

Last week, U.S. District Judge William Acker in Alabama ruled that Hood helped his "close confidant" Scruggs avoid handing over stolen insurance company documents that Scruggs wanted for lawsuits against State Farm Fire.

Hood accused Acker of interfering with a grand jury investigation and said judicial rules do not allow for "unnecessary attacks" on court officials. Hood also said he planned to file a motion asking Acker "to revise such uncalled for derogatory conclusions."