Industry representatives say more than 94 percent of Katrina-related homeowners' claims have been settled, while less than 1 percent of the claimants have entered an optional mediation program. They note that in Louisiana, only 8,000 formal complaints have been filed with the state insurance department—a modest number compared with more than 1 million claims in that state alone.

"The complaints are coming from a very vocal but tiny minority," Hartwig said. "There are some unrealistic expectations on the part of some policyholders and trial lawyers."

But plaintiffs' attorneys and consumer advocates say there is a big difference between settling a claim and settling it to the policyholder's satisfaction. They say this could be the beginning of a flood of lawsuits that could clog courts in Mississippi and Louisiana for years.

Allan Kanner, a policyholders' lawyer in New Orleans, said that since Katrina, his firm has helped to train more than 300 local lawyers, representing 15,000 clients, in insurance law. Walt Pierce, a spokesman for Orleans Parish District Court, the main civil trial court in the city, said this week that 1,099 hurricane-related lawsuits had been filed there as of Friday—and as he spoke, there was a line out the door to the clerk's office. "It's like we're giving away money," he said.

Frustrating efforts by all sides to draw a clear picture of claims-handling practices is a lack of concrete data. State regulators do not require insurers to disclose even the basics—including how many claims they deny as a percentage of the number filed, how long it takes to pay claims and how much the insurers' eventual payout differs from what policyholders sought. Indeed, the insurance industry's own data are sometimes hard to reconcile. For instance, according to ISO, the companies have reported that they expect to pay $25.3 billion in Katrina-related claims in Louisiana. However, the Louisiana Department of Insurance reports that insurers have paid $14 billion in Katrina-related claims so far.

Told of the industry's statement that 94 percent of all claims in that state had been settled, Louisiana Insurance Commissioner James J. Donelon said: "I don't believe it." He added that he expected many claims to be reopened by policyholders who think they have been short-changed.

Most of the disputes center on whether damage was caused by flooding, which is not covered by most homeowners' policies, or wind, which is. In an early win for insurers, U.S. District Court Judge L.T. Senter Jr. ruled this month that Nationwide Mutual Insurance Co. was justified in denying most of a Pascagoula, Miss., couple's claim on the ground that the storm surge that destroyed their home was a flood and that their policy's flood exclusion is "valid and enforceable."

But Senter gave hope to policyholders like the Spearses, who had complained about carriers citing something known as an anti-concurrent causation clause in denying their claims. This obscure clause, common to homeowners' policies nationwide, under certain interpretations allows insurers to deny coverage altogether if even a small percentage of damage can be attributed to a cause other than the covered peril.

"They said, 'If a tornado came through and two days later the water came, it's all flood,' " said George Arieux, another State Farm policyholder in Slidell. A video taken by one of Arieux's neighbors shows the entire neighborhood being battered well before Lake Pontchartrain rose.

In his ruling, Senter said the anti-concurrency language in the Pascagoula couple's policy was ambiguous and therefore invalid.

Louisiana State Sen. Julie Quinn made an unsuccessful attempt to pass a bill prohibiting insurers' use of the anti-concurrency clause. But she successfully pushed through a bill earlier this spring that forbade insurers to deny wind claims solely because damage was found below the floodwater line in an insured house.

While consumer advocates and industry spokesmen trade charges, Charles and Linda Spears wait to rebuild their house. Lakeview Drive, where dozens of homes once sat on the northern edge of Lake Pontchartrain, is today a scene of FEMA trailers, bare concrete slabs and vacant pilings.

A spokesman for State Farm, based in Bloomington, Ill., says its investigators found that water caused most of the damage to the Spears's house and that engineering reports support the company's assertion.

But Gerald Ciacca disagrees. Ciacca, who lives 80 yards inland from the Spearses, stayed through the hurricane because he got a late start and feared being trapped on the clogged roads. In an interview, he said he watched from a garage as the winds abruptly shifted from the north to the southwest as the hurricane passed.

"That's when all hell broke loose," he says. "It was just unbelievable. It was like nothing I've ever seen. That's when everything come apart."

He said he saw a whole row of houses on the Spears's block literally torn apart by wind, one next to the Spears's collapsing like a "deck of cards," leaving little for the storm surge to damage.

Ciacca, who says his insurer, a unit of Liberty Mutual, paid his claim nearly in full, said the damage to his home was largely done by the time he retreated to an attic as waters rose and flooded about a foot of his first floor.

The Spears's next-door neighbor, Leon Dupreire received $75,000 for wind damage from Allstate, but only after the company initially denied the claim altogether.

"The first thing they wanted to tell me was that it was all flood, but I wasn't going to fall for that," he said. He said he told Allstate representatives: "I'm an old Marine. I'm going to follow the chain of command. I can go until we hit God."

As for Linda Spears, she's gearing up for a court fight.

"I think they should pay for my whole policy," she said. "I paid the whole premiums."

Originally published on August 30, 2006 in the Washington Post Copyright © 2006 by Dean Starkman. Reprinted with permission.