In a decision that has captured national attention, the Mississippi Supreme Court has upheld its 2024 ruling against USAA, affirming nearly $15 million in punitive damages and attorney fees. The case, which originated from Hurricane Katrina’s devastation, raises serious concerns about claims handling practices and insurer accountability.
The Origins: A Family’s Fight for Coverage
The dispute began when the Minor family’s historic Ocean Springs home—partially designed by Frank Lloyd Wright—was severely damaged during Hurricane Katrina in 2005. Despite years of negotiation, the family accused USAA of using aggressive legal tactics and failing to honor the full benefits of their insurance policy.
The court sided with the family, concluding that USAA’s actions constituted bad faith. Justice David Ishee, writing for the majority, emphasized that the insurer prioritized premium collection over fair coverage, justifying the punitive award.
Industry Pushback and Political Involvement
The ruling has sparked widespread concern. A coalition of insurance groups, business leaders, and a former Mississippi governor urged the court to reconsider. Notably, Insurance Commissioner Mike Chaney filed a rare amicus brief supporting USAA, citing fears that such verdicts could destabilize the state’s insurance market.
Chaney argued that insurers are not structured to absorb punitive damages and warned that the decision might discourage companies from operating in Mississippi.
Claims Practices Under Scrutiny
Testimony from James Burke, a former senior claims examiner, revealed troubling gaps in USAA’s internal processes:
- Adjusters lacked training on wind-loss and prompt investigation standards.
- The company ignored early evidence of the home’s value and contents.
- Additional structures on the property were overlooked.
- No internal review followed a jury’s criticism of USAA’s claims handling.
Burke acknowledged potential violations of the Unfair Claims Settlement Practices Act, a model law adopted by most states.
Wind vs. Storm Surge: The Core Debate
Central to the case was the question of whether damage stemmed from wind or storm surge. The Minor estate argued that much of the home was elevated and not submerged, while Chaney maintained that flood insurance should have applied. However, the federal flood program would have covered only a fraction of the home’s value.
What Comes Next?
With the state’s highest court standing firm, USAA may appeal to the U.S. Supreme Court, citing constitutional concerns over punitive damages. Meanwhile, the insurer has been ordered to cover the costs of the appeal.
This ruling sends a clear message: fair, transparent, and timely claims handling is not optional—it’s essential. As co-counsel David Baria noted, punitive damages serve to deter misconduct and protect policyholders from unjust treatment.