Chubb to Settle Drought Lawsuit for $48 Million

Chubb Corp. agreed Wednesday to a $48-million settlement covering farmers in 10 Midwestern states who sued the company when their applications for 1988 drought insurance were denied.

The settlement must be approved by U.S. District Judge Carl Rubin in Cincinnati. Chubb said it would deposit $48.125 million with the court early next week as part of the agreement.

A lawsuit potentially representing 8,000 farmers in 10 states was filed in federal court in Cincinnati and was scheduled for trial Jan. 3 before Rubin.

The farmers alleged that Chubb, which is based in Warren, N.J., unfairly denied them insurance against crop damage caused by this year’s severe summer drought.

“I’m very pleased,” said Stanley M. Chesley, a Cincinnati lawyer representing the farmers. “I think this is going to work. The key is, farmers are going to get 100 cents on a dollar throughout all 10 states.”