State Farm Agrees to Huge Settlement of Katrina Lawsuits

State Farm Fire & Casualty Co. agreed Tuesday to settle hundreds of lawsuits by policyholders whose homes were devastated by Hurricane Katrina, a person with direct knowledge of the settlement told The Associated Press.

Terms of the deal were not immediately announced Tuesday. The insurer's agreement with Mississippi Attorney General Jim Hood and lawyers for several hundred policyholders was expected to resolve a civil lawsuit that Hood filed against the company for refusing to cover damage from Katrina's storm surge nearly 17 months ago.

The accord also is expected to end Hood's criminal probe of allegations that the Bloomington, Ill.-based insurer fraudulently denied claims after the August 2005 storm, the person with direct knowledge of the proceedings said. The person asked not to be named because the discussions have been closed to the public.

Mississippi's mass settlement — the first of its kind since Katrina spawned hundreds of lawsuits against State Farm and other major insurers — does not involve any claims in other states.

The deal was expected to be presented to a judge Tuesday afternoon. A State Farm spokesman said he could not immediately comment.