Katrina Probe Reaches Allstate Unit

A subsidiary of Allstate Corp. will be subpoenaed in an investigation into whether insurers improperly attributed Hurricane Katrina damages to floods rather than winds.

Allstate disclosed the information in a filing with the Securities and Exchange Commission, according to the Wall Street Journal (sub. req.).

The Department of Homeland Security is conducting the probe of insurers hired to adjust claims on behalf of the government for the National Flood Insurance Program. Private insurance policies often cover damages for winds but not floods.

Last month a New Orleans jury ordered Allstate to pay $2.8 million to a homeowner after it denied most of his Hurricane Katrina claim. The company had attributed most of his home damage to floods rather than wind, according to the Associated Press.

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