The first report, dated Oct. 23, found the couple's two-story home in Kiln, a rural community near the Mississippi-Louisiana line, was destroyed by hurricane-force wind — damage their policy covered. On Jan. 3, however, the firm issued a second report that blamed the damage on the storm's flood waters.

State Farm used the second report as the basis for denying the Mullins' claim. Insurance companies say their homeowners' policies do not cover damage from rising water, including wind-driven waters, but policyholders argue that storm surge should not be considered flooding.

"State Farm's actions show that it believes that it should be able to pick and choose which proof it relies upon in evaluating the validity of a claim," the Mullins' lawsuit states. "State Farm will only accept reports from engineering firms that support a denial of coverage."

Terri Mullins said she obtained a copy of the first engineering report from her local insurance agent's office in December. A month later, when employees of a State Farm office in Biloxi showed her the second report, she brandished a copy of the first and demanded an explanation.

"They flat out told me, `You were not supposed to get that (first) report,'" she recalled in an interview at the family business in Bay St. Louis.

Mullins and her husband are seeking unspecified damages from State Farm and Forensic Analysis & Engineering, the Raleigh, N.C.-based firm that prepared both reports.

Such disputes with insurance companies over the wind vs. water debate have been commonplace for many homeowners in the path of Katrina's destruction, particularly those without federal flood insurance.

The Mullins' case may be part of Mississippi Attorney General Jim Hood's fraud investigation. A grand jury in Mississippi has subpoenaed records from a State Farm office in Biloxi and from Forensic, according to both companies. A spokeswoman for Hood's office said she couldn't comment.

Forensic CEO Robert Kochan said his firm inspected between 160 and 175 storm-damaged homes for State Farm. In five or six of those cases, including the Mullins', engineers amended rough drafts of reports after developing new information about Katrina and how it damaged homes, he said.

"I will say categorically that State Farm never asked us to change our reports," Kochan said. "They did ask us to relook at and reconsider different factors that hadn't been presented to us initially."

State Farm spokesman Phil Supple said the Jan. 3 report on the Mullins' home was the only one Forensic sent to State Farm's claims office.

"State Farm contacted Forensic once it was determined this claim could more accurately be evaluated if we included an engineering review with our own claims analysis," Supple said. "Forensic sent State Farm its first and only report on Jan. 3, signed and stamped with the seal of a registered professional engineer."

One of the lawyers representing the Mullins is Richard Scruggs, a high-profile attorney who's suing State Farm and four other insurance companies for their handling of Katrina claims.

In an interview with The Associated Press last week, Scruggs said he's gathering evidence that companies are pressuring engineers to alter their conclusions on storm damage so claims can be denied.

Scruggs said a whistleblower — a "highly placed insider" at a major insurance company — has given him copies of "coerced and altered engineering reports" that companies tried to keep "under lock and key."