And in the past two years, the state-backed property insurer has logged 2,422 complaints about how claims are handled. That's far more than the number filed with the state's two largest private insurers. In the same period, State Farm received 142 and Allstate 218.
"What we've seen in hundreds of cases with Citizens is that they're just as bad as all the other insurance companies except worse because ... they claim they're the government and you can't sue the government," said Alan Garfinkel, founding partner of the Fort Lauderdale law firm Katzman Garfinkel.
Citizens spokesman John Kuczwanski noted that fewer than 1 percent of the 311,000 policyholders who filed 2004 and 2005 hurricane claims complained about the process. With 1.2 million policyholders, "a few dozen who have commented negatively could easily be countered by thousands, if not hundreds of thousands, of satisfied policyholders," Kuczwanski wrote in an e-mail.
Citizens policyholders James and Anita Sokolowski, and their daughter, Terrill Friedrich, are reminded of Hurricane Wilma every time they walk into their West Palm Beach home with its leaky roof and the stench of mold so strong they get headaches.
The family is among 1,634 Citizens policyholders who sued the insurer over claims disputes from 2004 and 2005 storms. In numerous cases, Citizens was slow or failed to respond to requests for information or meetings, and as time passed, the damage in many homes worsened, policyholders say in court papers.
"They should be held to a higher standard than the private industry, especially because that's where some of our tax dollars go and some people don't have any other choice," Friedrich, 32, said.
Citizens must strike a delicate balance between paying claims fairly and spending money responsibly because all Florida policyholders pay fees on their homeowner insurance to help offset Citizens' deficits after the 2004 and 2005 hurricanes.
The state formed the insurer as a last resort for homeowners to help cover the higher-risk areas of the state that private insurance companies were reluctant to insure. Those locations tend to suffer greater damage and, therefore, generate more disputes, said Martin Grace, professor of risk management at Georgia State University.Citizens paid $6 billion for 2004 and 2005 hurricane claims, compared with about $5 billion paid by State Farm and more than $2 billion paid by Allstate.
Consumer advocates said Citizens' benefits outweigh its flaws.
"The government is known for bureaucracy, not customer service. But it does have a low price," said Bill Newton, executive director of Florida Consumer Action Network. The Legislature has frozen Citizens' rates until 2010.
Policyholder suits over the bad-faith issue have been settled or resolved, so state court judges have yet to make a final ruling on the central question of Citizens' immunity as a government entity. Last year, the Legislature amended one of three state laws dealing with the bad-faith matter, but the company's status remains unclear because the statutes are conflicting.
"Bad-faith laws typically are designed to ensure that for-profit companies do what is right, and Citizens is a governmental, not-for-profit entity without any motive to act in bad faith," Kuczwanski said.
Robert Klein, director of Georgia State's insurance research center, said that belief could affect how Citizens handles claims.
"If Citizens believes it's immune ... that reduces the pressure to pay some claims that private insurers would," he said.
John Novak, a former Citizens contractor hired by the insurer from 2006 to 2007 to defend its estimates of claims, said he often knew the damage estimates wouldn't cover repair costs.
"In almost all the situations, it couldn't be done" for the amount Citizens estimated, said Novak, who now represents policyholders in claims disputes.
Adrian Acosta, a former Citizens claims coordinator who cut checks to policyholders until 2006, said there was an unspoken understanding that policyholders would be paid as little as possible.