A post-Katrina jury has slapped the good hands of Allstate  with a $2.8 million verdict, including $1.5 million in punitive damages, for refusing to honor its policy holder’s claim for wind damages.

According to news reports, the Allstate adjuster who inspected the premises originally stated all the damage to the Slidell home could have been caused by wind.  However, he ultimately deferred to Craig D. Rogers of Rimkus Consulting Group (318) 415-0190, cdrogers@rimkus.com, who despite never having inspecting the house, issued a report insisting it had been swept away by storm surge and was therefore not covered.  The jury disagreed, siding with the policy holder, who pointed to engineering data showing the water never reached the bottom of the house.

The Fortune 500 insurer, which was roundly booed at the Sugar Bowl it sponsored earlier this year, may downplay the verdict as an aberrant award by a runaway jury. But it should be ashamed of itself. Punitive damage awards are not given lightly in Louisiana, especially in the Eastern District of Louisiana, which encompasses all of Greater New Orleans, including the conservative suburbs. In fact, since the state adopted tort reform in 1996, punitive damages are unavailable except in certain cases, including those involving child molesters, drunk drivers, and worse, bad faith insurers.

Of course, Allstate will still have an opportunity ask the federal judge to throw out the award, and it can certainly take an appeal. Moreover, the verdict will have no precedential effect on any other case.

Yet the prospect of getting slapped a few hundred times with multi-million dollar punitive damage awards is less than appealing, and must be causing an Allstate executive or two to lose some sleep tonight. On the flip side, it’s giving New Orleans’ plaintiffs’ lawyers – who are all experts in insurance law now – 2.8 million reason to smile.