MIAMI – Hurricane Charley (search) probably will not cause Floridians' insurance premiums to skyrocket like 1992's Andrew, and fewer insurers should go bankrupt from paying out damages expected to reach the billions of dollars, state and industry officials said Saturday.
They say previous premium increases and overhauls made because of Andrew, the most expensive natural disaster in U.S. history, will help pay for Charley.
But some of those changes will mean the deductibles homeowners have to pay for Charley's damage could be thousands of dollars higher. State officials also warned Floridians to watch out for unscrupulous people trying to make a buck off the hurricane.
Insurance claims adjusters descended on the state Saturday to begin surveying the disaster, which is expected to cause the most losses from a natural disaster in Florida since Andrew devastated much of southern Miami-Dade County (search).
Charley caused widespread damage to oceanfront homes and trailer parks when it came ashore in southwest Florida a day earlier with 145 mph winds and crossed the state to Daytona Beach. About 1 million people lived in the area around where the Category 4 storm made landfall.
Among the hard-hit were two counties in the Fort Myers area where thousands of mobile homes were in Charley's path. Officials said hundreds of expensive beachfront homes on barrier islands, such as tourist destination Sanibel-Captiva, were damaged or destroyed.
Andrew, a stronger Category 5 storm (search) with 165 mph winds, caused about $20 billion in insured property losses, according to estimates adjusted for inflation. Eleven smaller insurance companies went bankrupt, and about 930,000 policyholders were left with no coverage options.
Charley "is the type of storm our system is developed to handle" without tremendous rate increases or insurer bankruptcies, Florida Insurance Council spokesman Sam Miller said.
The Insurance Information Institute believes Charley will cost "at least several billion dollars," but the industry will be able to make those payments, spokeswoman Loretta Worters said.
"They have enough in reserves so that isn't a problem," she said.
Some residents in Charley's strike zone were doubtful about the industry's promises.
As Fran and Roy Zimmerman cleaned up the mess at their Punta Gorda (search) home, they expected their annual homeowners insurance bill to surpass its current cost of $2,000.
"They have to pay out so much more, they'll want to get it back," Fran Zimmerman said. "There's no doubt about that."
Miller said premiums that increased an average of 100 percent statewide and 200 percent in South Florida after Andrew mean the insurers are better prepared financially.
"That was painful but all that (money) is in the system now," Miller said. "We were woefully unprepared for Andrew."
The state has also overhauled insurance regulations since 1992. Florida now has a $15 billion Hurricane Catastrophe Fund, which provides reinsurance, or insurance for the companies themselves, to help them pay for major disasters.
Lawmakers also created a state-regulated insurer of last resort for people who couldn't get coverage in the private market. Now known as Citizens Property Insurance Corp., it provides hurricane coverage for about 812,000 homes in Florida.
But another change in state law lets insurance companies charge policy holders a percentage deductible instead of set dollar amounts, which used to be around $500-$1,000, Worters said.
Most homeowners now have a 2 percent deductible, Worters said. So the owner of a $200,000 house would have to pay for the first $4,000 in damages before their insurance policy kicked in.
While state officials say these changes make the insurance industry better prepared for Charley, they still warned Floridians to watch out for old-fashioned scams. Florida Chief Financial Officer Tom Gallagher, who oversees the insurance industry, and Attorney General Charlie Crist cited two hotlines: 1-800-646-0444 to report price-gouging and 1-800-22-STORM to report unlicensed adjusters or other insurance scams.
Crist said he has received more than 100 calls of complaints of price-gouging, and Gallagher urged people not to pay cash for repairs.
"There are a lot of scam artists flooding the area," Gallagher said.