Describing an unpaid insurance claim as "hellish" seems like hyperbole until you've experienced it firsthand, as Julie Wick did. A stray cigarette left outside by a neighbor in 2003 started a fire that spread to Wick's family's house in Eden Prairie.
The case was finally settled three years later at a loss to the Wick family, but only after she had to take a leave of absence from her employer to fight an insurance company that wouldn't pay.
When the leave of absence ended, she quit her job in order to keep fighting. As she tried to replace nearly all of the household possessions ruined by smoke or water damage, she exhausted all of the family's retirement savings to pay bills. Most insurance companies reimburse only after showing receipts, not before, so policyholders have to spend thousands of dollars of their own money before reimbursements.

Almost five years later, Wick says it's hard to look back and it's hard to forgive her insurance company. "I hate them," she said.

Most of us who have bought insurance know about the advantages of guaranteed replacement coverage, inflation riders and higher deductibles, but none of those features matter if you end up with an insurance company that won't pay your claims. The ability and willingness of your homeowners insurance company to pay claims becomes more important as the likelihood of losses increases. As weather patterns have arguably become more violent and unpredictable, consumers should have their eyes on more than the skies.

Unfortunately for consumers, payouts for claims continue to decline. Even though Hurricane Katrina in 2005 caused the highest hurricane losses ever, the property casualty insurance industry realized record profits that year. The percentage of premiums paid out to policyholders in 2005 was about 55 percent, far lower than the 75 percent payouts in the late 1980s, said J. Robert Hunter, insurance director at the Consumer Federation of America.
Insurance companies have profited by "overcharging consumers, cutting back on coverage, underpaying claims and getting taxpayers to pick up some of the tab for risks the insurers should cover," Hunter said. Not homeowner-friendly Insurance companies have some very anti-policyholder practices, especially in homeowners insurance, said Douglas Heller, executive director for Taxpayer and Consumer Rights in California.
The industry believes it's being fair, having to deal with fraud and large losses, said Loretta Worters of the Insurance Information Institute in New York, a trade organization sponsored by the property casualty industry. Still, Hunter said, it would take five Katrinas to get rid of the industry's $150 billion in excess capital and reserves.

Making matters worse, extreme weather is on the upswing, said Paul Douglas, WCCO-TV meteorologist, including January tornadoes in Wisconsin and February twisters in Tennessee and Arkansas. As background temperature increases the capacity of the atmosphere to hold more water vapor, you load the weather dice in favor of more floods, hail and severe thunderstorms in general, Douglas said.

Minnesota and Wisconsin have seen significant spikes in extreme weather events (34 and 31 percent respectively) from 1948 to 2006, according to Environment America, a Boston-based environmental advocacy group.
Some argue that the uptick can be attributed to the meteorological community doing a better job of documenting severe storms rather than a real increase, he said, but other factors might be at work, too. The increase in flooding may be the result of less farmland and more development.
Flash flooding can occur where water can't soak in naturally (parking lots, highways, other pavement and buildings). Now is a good time to determine whether your homeowners insurance could become a nightmare.
Finding a reliable company with few complaints is more important than ever, but that doesn't mean chucking price comparisons out the window. Make price shopping by phone easier by having your declaration page with coverage limits handy so comparisons are equal from company to company.
Also, ask the agent if you are being quoted in the "preferred" category. If not, ask why. For example, some companies charge more for certain ZIP codes; other don't. In the past couple of years, consumers with excellent credit may have seen their premiums drop as much as 20 percent. If your rates have increased and your credit is good, call your agent.
It's a good idea to shop around every few years. If you really like your agent and competitors' prices are lower, ask your agent for a loyal-customer discount, especially if you've been a customer for five years or more.
As for Wick, who now lives in Chicago, she dumped her former insurance company (which had threatened to drop her as soon as she made the fire claim). Now she's insured by Chubb, a company that consumers have rated highly in the past. John Ewoldt • 612-673-7633 or jewoldt@startribune.com. His articles are online at www.startribune.com/dollars.

FLOODING LOSS OF PROPERTY WINTER STORMS TORNADOES