PENSACOLA BEACH, Fla. – Hurricane Ivan (search) washed three yachts into Jerry Hagn's house, totaling it, but that was just the start of seven-months in what he likens to "The Twilight Zone" before getting an insurance settlement.
With another hurricane season dawning June 1, more than 50,000 claims from the four major storms that struck Florida last year remain unresolved. Floridians also can expect higher insurance rates after hurricanes Charley (search), Frances (search), Ivan and Jeanne, which caused an estimated $22 billion in insured damage.
Hagn is among 118,000 customers who filed claims with problem-plagued Citizens Property Insurance Corp., the state-created insurer of last resort and Florida's second largest carrier. Citizens accounted for 11 percent of 1.7 million overall claims.
Hagn, a 50-year-old electrical engineer, is living in nearby Gulf Breeze until his house in this barrier island community can be rebuilt.
"Dealing with the insurance company is like being in `The Twilight Zone,' " he said. "I got a different picture from everybody I talked to. We were sent money with no explanation, and you could not get an explanation. It was mind-boggling."
Officials at Citizens acknowledged being unprepared for what hit them in 2004, the first time four hurricanes struck Florida in one year. State regulators received more than 4,000 complaints about Citizens, nearly double the number filed against State Farm, Florida's biggest carrier.
State Farm and other large private insurers were able to bring in company adjusters from across the country, but Citizens hired outside contractors for all adjusting and consumer service work. Many were from out of state and also worked for private companies, often giving them priority over Citizens.
Adjusters typically stayed a few weeks and went home, and then had to be replaced by new ones who started from scratch, said Citizens spokesman Justin Glover. That's one reason why Hagn had such a hard time getting a straight answer.
"We recognize there were terrible customer service problems," Glover said. "We are in a better position (this year) to handle our customers' needs."
Citizens has hired 400 adjusters and support staff. That still may not be enough, but Citizens cannot afford to "put 3,000 adjusters in a room with nothing to do" until the next hurricane, Glover said.
Citizens also has improved computer and telephone systems and will open a claims office in Miami-Dade County and possibly at other sites.
Some private insurers also had adjuster problems. Many adjusters from other states, Canada and even Europe didn't understand Florida regulations and building codes, said Lauren Cain, consumer outreach chief for the state Department of Financial Services.
Cain said victims often found their policies were insufficient to cover living expenses while their homes are being repaired or rebuilt. Homeowners also were shocked by unexpectedly high deductibles and repair costs well beyond policy limits due to tough new building codes and inflationary shortages of labor, contractors and materials.
Consumers should get an annual "insurance checkup" and keep enough money in the bank to cover deductibles, Cain said.
Sam Miller, spokesman for the Florida Insurance Council, which represents insurance companies, said consumers can avoid at least some potential out-of-pocket expenses by paying a little extra for policies that cover the replacement cost rather than cash value of their homes.
Miller expects private insurers to seek rate increases averaging 10 to 20 percent. They'll probably be bigger in Central Florida because the 2004 storms caused more inland damage than foreseen, Miller said. Coastal areas already pay higher rates so increases there may be less.
Insurers will be asking much bigger increases, however, for mobile homes and may even stop covering them, Miller said.
Private companies generally abided by a request from state regulators to put off rate filings until after the 2005 legislative session, which ended May 6.
It did not apply to Citizens, which raised rates April 1 an average of 11.8 percent for wind-only policies and 19.7 percent for all perils. Average annual premiums for single family homes increased by $202 to $1,858 for wind-only and by $415 to $1,710 for all perils.
Citizens is expected in June to seek a 6.8 percent surcharge on private companies to cover a $516 million deficit due to last year's hurricanes. The companies can pass the surcharge on to customers. That would add, for example, $68 to a $1,000 premium.
Homeowners with damage from more than one hurricane had to pay multiple deductibles, one for each storm, but Florida lawmakers passed emergency legislation to reimburse them up to $10,000 per extra deductible. They also set a future limit of one deductible per year.
Miller expects the latter provision to have a negligible effect on rates. A bill passed in the waning hours of this year's legislative session also should prevent much bigger increases that had been looming for coastal areas. It has the effect of undoing a January 2004 ruling by the 4th District Court of Appeal.
Citing a law dating back more than 100 years, the court ordered the Florida Windstorm Underwriting Association, since replaced by Citizens, to pay full policy limits to Zennon Mierzwa because his Fort Lauderdale home was a total loss from Hurricane Irene in 1999 even though flooding was partly to blame.
The new legislation lets wind insurers pay only the portion of damage caused by wind to flooded properties, but it is not retroactive to last year's hurricanes.
Many wind insurers, despite the Mierzwa ruling, refused to pay policy limits for flood-damaged homes and that has prompted a series of lawsuits by 2004 hurricane victims. Miller estimates up to 2,000 claims, mostly in the Panhandle, could be affected by the litigation.
A class action against Citizens may even add to Hagn's settlement. Citizens initially offered him only $1,500 but later agreed to pay $83,000 after state-sponsored mediation.
Hagn figures the wind settlement plus $250,000 in flood insurance -- the standard policy limit -- will leave him at least $50,000 short of what he needs to rebuild, but he decided against suing Citizens individually.
"I've had enough," Hagn said. "It's close enough. I'm moving on."