State Farm must pay $2.5 million in punitive damages to a couple whose house was destroyed by Hurricane Katrina, a Mississippi federal jury ruled yesterday.

The panel's finding came hours after U.S. District Court Judge L.T. Senter Jr., in Gulfport ruled that the homeowners, whose claim had been denied by the insurer, were entitled to $223,292 for their house.

At that time he also rejected arguments from the Bloomfield, Ill.-based insurer's attorneys and ruled the jury could consider punitive damages against State Farm.

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