GULFPORT, Miss. — A jury awarded $2.5 million in punitive damages against State Farm Fire and Casualty Co. for a Mississippi couple for denying their Hurricane Katrina claim. The decision could benefit hundreds of other homeowners challenging insurers for refusing to cover billions of dollars in storm damage.

State Farm said it will likely appeal.

Earlier yesterday, U.S. District Judge L.T. Senter Jr. had taken part of the case out of jurors' hands before they awarded punitive damages to State Farm policyholders Norman and Genevieve Broussard of Biloxi.

Senter ruled yesterday morning that State Farm is liable for $223,292 in damage caused by Hurricane Katrina to the Broussards' home. Senter left the punitive damages to the jury.

Senter's decision to make a directed verdict rather than let the jury decide the entire case appeared to surprise everyone in the courtroom. After he explained his ruling, Senter ordered a recess to give attorneys time "to get over the shock."

After the jury announced its award, the Broussards left the courthouse arm in arm.

"It's a great day for south Mississippi," Norman Broussard said.

Senter's decision calls into question insurance companies' refusal to cover billions of dollars in damage from Katrina's storm surge.

The judge's decision and the jury's award also are likely to impact recent settlement talks between State Farm, Mississippi Attorney General Jim Hood and other plaintiffs' attorneys.

This week, people with direct knowledge of the settlement talks told The Associated Press that State Farm is considering paying hundreds of millions of dollars to settle more than 600 lawsuits and resolve thousands of other disputed claims.

The Broussards' case wasn't directly part of those negotiations, but Hood said the verdicts only strengthen his position in the ongoing settlement talks.

"Hopefully they will come to their senses and realize that the American people are not going to stand for robber baron companies, like the insurance companies, running over people," the attorney general said.

Randy Maniloff, a Philadelphia-based lawyer who represents insurers and has closely followed the Katrina litigation, said Senter's ruling was a "huge verdict" for homeowners even if the jury hadn't awarded punitive damages.

"That settlement is looking awfully good for State Farm now," he added.

The Broussards sued State Farm for refusing to pay for any damage to their home, which Katrina reduced to a slab. The couple wanted State Farm to pay for the full insured value of their home plus $5 million in punitive damages. The Broussards claimed a tornado during the hurricane destroyed their home. State Farm blamed all the damage on Katrina's storm surge.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm's rising water.

Senter, however, ruled that State Farm couldn't prove that Katrina's storm surge was responsible for all of the damage to the Broussards' home. The judge also said the testimony failed to establish how much damage was caused by wind and how much resulted from storm surge.

State Farm spokesman Phil Supple said after the jury's verdict that the company is likely to appeal the decision.

"We are surprised and disappointed by both the judge's ruling on the coverage issues and the amount awarded by the jury for punitive damages," he said in a written statement. "We believe the expert testimony supported a different result."