Insurance companies' handling of Hurricane Katrina claims willbe investigated by the U.S. Department of Homeland Security thanksto Sen. Trent Lott, R-Miss., who has a personal beef with his ownhomeowners insurer.

The senator–who is suing State Farm Fire & Casualty over aKatrina claim–inserted language mandating the probe into thedepartment's 2007 appropriations bill, signed by President Bushearlier this month.

“As is well known,” said Lee Youngblood, a representative forSen. Lott, “the senator has some concerns about the insuranceindustry and the way the insurance industry handled things,post-Katrina, on a number of levels.” The provision, he added,“would allow the [inspector general] to look into the insuranceindustry's approach to the National Flood Insurance Program and seeif there were any problems” with how claims were handled.

Specifically, the bill calls for DHS to examine whether insurers“improperly attributed damages” from Hurricane Katrina to floodingrather than to windstorms. The bill sets a deadline of April 1,2007 for the inspector general to report his findings toCongress.

Rep. Gene Taylor, D-Miss., called for a similar study inlegislation designed to reform the NFIP, but that bill failed towin passage. Like Sen. Lott, Rep. Taylor has filed suit againstState Farm over the handling of a claim after the hurricane.

The language of the appropriations bill does not mandate themechanics of how a study would work, and Mr. Youngblood said thespecifics of the study would be determined by the inspectorgeneral's office.

Mr. Youngblood said Sen. Lott expects only for the study to“determine whether the [NFIP] program was misused in any way.”

Fraser Engerman, a representative for State Farm, said “most ofthe government programs we participate in, including the NationalFlood Insurance Program, already have longstanding auditingprocedures. We understand that is part of the process and we intendto cooperate fully with any additional inquiries that may come ourway.”

The DHS probe will join Mississippi inquiries by federal andstate grand juries, which are investigating State Farm's Katrinaclaims handling.

Sen. Lott's case against the company is scheduled for next Junein U.S. District Court in Gulfport, Miss. He filed suit when hishome was destroyed and the company told him the loss was notcovered because the damage was caused by flooding–a peril excludedin his policy.

Sen. Lott contends his agent represented that the policy coveredall hurricane damage, and that the policy is supposed to coverhurricane-driven storm surge.

When he announced his action, Sen. Lott said he had “joined in alawsuit against my longtime insurance company because it will nothonor my policy, nor those of thousands of other SouthMississippians, for coverage against wind damage due to HurricaneKatrina.”

He is represented by the law firm of hisbrother-in-law–high-profile attorney Richard Scruggs. In his firstcase to be brought on the wind vs. water issue, Mr. Scruggs securedhis clients only minimal damages and the insurer claimedvictory.