"I Lost My Home and Everything I Owned, and All I Got Was This Lousy Teddy Bear"

The Clarion Ledger reports:

Elizabeth Lynch, 91, a postmaster of Pearlington for more than 40 years, always paid her State Farm insurance policy a year in advance and followed suggested guidelines for coverage.

When Hurricane Katrina struck, her roof collapsed, and she looked to her policy for help.

Her claim was denied.

Instead, the insurance company sent over a small teddy bear wearing a red and white State Farm shirt, saying it would be comforting to "hug the little fellow" in her time of need.

The back of the shirt read "Good Neigh Bear."

"Now there are words to describe my feelings at that moment, but being a lady, I don't use that kind of language," Patricia Cole Wilson, who had power of attorney for Lynch, wrote in a letter. Lynch died in November 2005.

The exchange is part of a file of insurance "horror stories" 4th District U.S. Rep. Gene Taylor, a coastal Democrat, has been collecting - accounts that have become the battle cry for some post-hurricane policyholders.

The insurance imbroglio has unfolded in the courts, in mediation disputes and in waves of angst and animosity among residents living in Federal Emergency Management Agency trailers and contending with crippling increased insurance rates that threaten to stall recovery.

Homeowners are up against a 90 percent increase in rates, while businesses are seeing a 268 percent hike under the state-created Mississippi Windstorm Underwriting Association, or wind pool.

State lawmakers are wrangling over how to salvage Mississippi's wind pool and keep those numbers down, major insurance reforms are working their way through Congress, and a push for federal indictments is under way.

"I do respect the fact that there were people's lives that were turned upside down and a lot of them did not have flood insurance and a lot of them don't have physical, corroborated evidence around what wind damage might have been done to their properties prior to flood, and that's where we're in this challenge today," said Mike Fernandez, a spokesman for State Farm.

State Farm never meant any offense with the bear, he said.

"We try to manage in a way that is thoughtful and considerate, and I apologize if the customer took it somehow in some other way," he said.

In sending the bear, State Farm told Wilson the damage to Lynch's home was because of flooding and not wind and Lynch wasn't covered for that.

A policy is a contract, and the company simply worked to meet the terms of those contracts, Fernandez said. Now lawyers and politicians say the rules no longer apply, he said.

Such explanations have been little comfort to residents who paid dutifully on their policies for decades only to have their claims denied. They are reeling from astronomically high home and business insurance rates, so high the rates are impeding recovery. And some, like Wilson, are pointing to engineering reports they say challenge insurance company conclusions about what caused the damage.

They are wondering whether they'll ever trust an insurance company again.

Richard Finegan, a retired operations technician for General Electric, got $8,000 for $200,000 worth of damage. His insurance company said water, not wind, caused the problems.

When the Aug. 29, 2005, storm struck his three-bedroom brick rambler in Waveland, the four walls stood, but everything else was wiped out.

Along with it went all the memories of his two children - his 12-year-old son and 21-year-old daughter who were killed in a 1999 accident near a rail crossing.

He said he thought the insurance company would take care of him.

"It isn't the brick and mortar that we worry about," though, said Finegan, his blue eyes welling up with tears.

His sister later found a drawing his son had done - one of those stick drawings that said "I love my dad because ..."

He keeps it in his FEMA trailer.

Finegan never challenged the insurer's decision, but he says he believes homeowners are due more rights, protections against residents thinking they're insured for everything when they're not.

"They've got all the cards," he said of the insurance companies. "They've got the legal team. They've got the resources. And us little civilians out there, we're trying to get our head above the water and survive."

But Mississippi is mistaken if it thinks it has the clout to mandate business on its terms, said Larry Cox, the Robertson Chair of Insurance at the University of Mississippi. There has been an attempt to shift huge losses to insurance companies for a calamity they never could have anticipated, he said.

A state with a small population and small economy cannot afford to create obstacles for companies. Mississippi is not Florida, he said.

"We're not the tail on the dog. We're the tiny freckle on the tip of the tail of the dog when it comes to our economic clout."

He has no doubts some mistakes were made by insurers but just can't believe there was any systematic attempt to deny claims. "I mean, that would just be really bad business."