A proposed class action has been filed against State Farm Fire and Casualty Company and Allstate Insurance Company on behalf of Mississippi Gulf Coast residents who allege that the insurers caused unreasonable financial hardship in violation of state insurance law when they unfairly penalized homeowners by imposing a 2% deductible on homeowners' insurance policies in the aftermath of hurricane Georges in 1998. The action seeks damages equivalent to the amount of the deductibles that they were denied.

The proposed class is made up of Mississippi residents (1) who own or owned dwellings in Jackson, Harrison, or Hancock counties in Mississippi that were insured by either State Farm or Allstate, and (2) whose insurance recovery for damages from the hurricane was reduced or eliminated by the alleged deductible. The action alleges that the insurance companies conspired to impose the excessive deductible and threatened the Mississippi Insurance Commissioner with a denial of coverage for homeowners in the coastal counties unless the deductible was levied. The deductible was not imposed on residents of any other counties.

Allegedly, the effect of the discriminatory deductible was to unfairly penalize homeowners on the Mississippi Gulf Coast-- hurricanes often inflict damage to non-coastal counties of a magnitude equal to or greater than damage to coastal communities. The reduction or elimination of reimbursement due to the deductible was allegedly significant. For example, if a policyholder suffered $5,000 in damages and the face value of the policy was $100,000, the insurance carrier would pay only $3,000. In effect, the insurance companies were attempting to profit from the misfortunes of those whom they were obligated to protect.

The action seeks to assert claims on behalf of more than 13,000 residents as the first class action in the history of the state of Mississippi. Though the Mississippi Supreme Court has not adopted class action procedures, the identical issues of fact and law make a class action mechanism the most logical, prudent and fair manner to handle the cases. Mississippi is the only state in the country that does not utilize class actions.

Attorneys representing the Mississippi homeowner plaintiffs are doing so on a pro bono basis and are not seeking any attorney's fees.