As the immediate humanitarian crisis eases in the Gulf Coast states, people are turning their attention to recovery, and for the vast majority, the key to recovery is an insurance claim.

Insurance adjusters are flooding the region to cope with claims expected to number in the millions. Homeowners across a huge swath of the country now confront the most important financial moment of their lives -- getting an insurer to keep its promise to make them whole after a disaster. Some are likely to be caught up in a contentious debate over how much of the hurricane's damage should be attributed to flooding.

As an insurance man crawled around a roof the other day in the broiling Mississippi sun, Eddie A. Holloway stood below in the kitchen, pointing to strips of paint and plaster hanging from a giant hole in the ceiling of a rental house he owns in Hattiesburg.

The house, in a poor section of town, was rendered uninhabitable by the storm, and the tenants fled. "They're gone," he said, and so is his income on the property, perhaps for weeks or months.

State Farm adjuster Curtis Rasmussen, fresh in town from Utah to handle claims, crawled down a trembling stepladder toting a digital camera to show Holloway the damage. Hurricane Katrina had stripped the roof bare, and a new one would be required. On this modest house alone, 70 miles from the Gulf of Mexico, State Farm will be writing a check for thousands of dollars.

The scene will replay again and again across the region. Everywhere but New Orleans, insurance adjusters are thick on the ground already -- stuffing hotels, grabbing anything that resembles office space, firing up generators and pointing satellite dishes skyward in a desperate attempt to get Internet access in a region where many people still lack electricity. They are buoying spirits across three states with immediate $2,500 and $5,000 checks to cover living expenses.

But the process of adjudicating several million claims has barely begun, and Hurricane Katrina is already posing a vexing set of insurance problems that will reach all the way to Washington. For starters, much of the damage along the Gulf Coast was caused by a surge of water that rose as high as 30 feet, the biggest storm surge ever recorded in North America. That surge was technically a flood, even though it was produced by a hurricane, and it is not covered by standard homeowners' insurance.

Flood insurance has to be bought separately from the federal government. Many people in New Orleans had it, and they are likely to be made whole, though the payments are expected to send the government's flood-insurance program into the red.

In Alabama and Mississippi, by contrast, many people did not have flood coverage, and that is sowing the seeds of a potentially vast conflict involving angry consumers, insurance companies, banks that write mortgages, state regulators and lawmakers in Washington.

A huge fight may yet be averted if insurers succumb to political pressure to attribute most of the region's damage to wind instead of flooding -- a policy that regulators say could put some insurers at risk of bankruptcy.

If the insurers enforce their policies as written, politicians are going to find themselves coping with unhappy constituents throughout the Gulf Coast who did not realize their damage would not be covered. There is already talk of massive lawsuits and the need for wholesale changes in the way federal flood insurance works.

"I had $60,000 worth of contents, and I thought I had it made," said Dorice Mitchell, a 40-year resident of Pascagoula, Miss., who lost many of his belongings when his house flooded. He walked away from a State Farm catastrophe center empty-handed last week after learning his policy won't help him. "They said it ain't worth a dime. No flood insurance. I'm going to be living in apple crates."

Because the task of assessing damage has barely begun, nobody has a clear idea how large insurance payouts will be. Preliminary forecasts run as high as $60 billion, which would make Katrina far costlier than Hurricane Andrew, the monster 1992 storm that walloped southern Florida, Louisiana and Mississippi and led to insurance payments of more than $20 billion in today's dollars. Andrew was a "dry hurricane" that did not produce anything like the flooding associated with Katrina.

Insurance companies will not offer estimates of their exposure, saying it is simply too early to tell. But in this college town in southeastern Mississippi, it is possible to get a preliminary sense of the financial scope of the disaster.

Katrina did not fall below hurricane strength until the eye was near Laurel, Miss., 30 miles northeast of Hattiesburg and 100 miles from the Gulf of Mexico. The storm caused damage in a dozen states and reached Canada before it weakened into insignificance. Katrina cut a devastating path deep into central Mississippi, paralyzing the state government in Jackson for days.

In regions so far inland they rarely see damage from tropical storms, Katrina killed dozens of people, snapped electrical poles off at the ground, drove tree limbs deep into houses, ripped open roofs, knocked down barns and traumatized tens of thousands of people. As of Saturday, more than 427,000 households in Louisiana and more than 162,000 in Mississippi remained without power, according to the U.S. Department of Energy.

Throughout the region, governments were struggling over the weekend to restore basic services. Hundreds of thousands of people were still living in shelters. Frenzied utility crews sweated in the hot sun, swatting away bugs, to rebuild the region's electric grid.

State Farm, the nation's largest insurance carrier and also the largest in the afflicted states, grabbed an old furniture store in Hattiesburg right after the storm to set up a catastrophe center, and more than 100 adjusters are already operating out of it. State Farm, Allstate and other insurers have also stuck vans with claims processors in the parking lots of malls and Home Depot stores across the region.

The companies, whose policies generally reimburse people for temporary living expenses caused by a disaster, are writing instantaneous checks for policyholders forced out of their homes. "For some of them it's a total surprise," said Daniel McNamara, who lives in Connecticut and heads a Metropolitan Life Insurance Co. catastrophe team operating at the Home Depot parking lot in Hattiesburg. "They're tickled pink."

Under a tent in a parking lot in Pascagoula last week, policyholders waited to see State Farm representatives. Shondra Jefferson, traumatized from watching people drown in the storm, left her 15-minute meeting with State Farm clutching a $2,500 check. "My funds are depleted," she said. She plans to use the money to patch her roof and clear debris.

Consumer advocates who monitor insurance issues say this initial phase of disaster response usually goes well.

"The insurance industry has learned that while the TV cameras are rolling, it's good to put on your nice shirt and write some additional living-expense checks for people," said J. Robert Hunter, former Texas insurance commissioner and director of insurance at the Consumer Federation of America in Washington. "It's nice theater. And in fact, they owe the money. The trouble comes months later."

State Farm's temporary center in Hattiesburg will be ground zero for handling claims from 13 Mississippi counties, not including the six closest to the Gulf of Mexico. Randy May, who arrived from Denver after the storm to head the operation, said his territory includes 24,000 homeowners with State Farm policies. By Friday afternoon, 8,505 of those policyholders had already called to report claims, and 12 percent of the cases were classified as having severe damage.

The insurers pride themselves on rapid response to catastrophes. When Holloway, dean of students at the University of Southern Mississippi in Hattiesburg, called State Farm to report damage to several of his rental properties, he heard back from Rasmussen, the adjuster assigned to two of his houses, within two hours. "I was totally surprised," Holloway said. "I'm most grateful for the immediate response."

Still, settling claims is often a laborious process that can involve haggling over contractor estimates and over the value of a home's contents, assuming they were destroyed. Particularly near the coast, many people lost the very records that would let them document the value of their contents. And demand for contractors will be sky high in the disaster zone, slowing work.

The biggest debates are likely to come over whether homes near the coast were destroyed by wind or flood.

Of the estimated 400,000 flooded properties in three coastal counties of Mississippi -- Hancock, Harrison and Jackson -- just 21,600 had flood-insurance policies, said George Dale, the Mississippi insurance commissioner.

Though some flooded residents of Louisiana also lacked flood coverage, that state is in better shape, according to figures from the Federal Emergency Management Agency. As of September 2004, 376,681 flood policies were in force in Louisiana, compared with 41,946 in Mississippi and 41,336 in Alabama.

"All these people pay high insurance to live on the coast," Dale said. "They think, 'Well it has never flooded before. I'm paying enough already -- I don't need it.' "

Hunter, of the consumer group, said most coastal homes probably suffered some wind damage before floodwaters destroyed them. But he said insurers have a financial incentive to attribute as much of the damage as possible to flooding, since they do not have to pay flood claims.

Hunter called on state insurance departments to pressure the companies to use windstorm modeling or other techniques to try to calculate how badly homes in a given neighborhood were damaged by wind before the water hit.

"What I'm afraid you'll see is, the policyholder has a $100,000 house and the insurance companies will say, 'It's 5 percent wind damage,' " Hunter said. " 'Here's $5,000; take it or leave it.' "

Staff writer Joshua Partlow contributed to this report. Gillis reported from Hattiesburg, Joyce from Pascagoula, and Partlow from LaPlata.

State Farm claims representative Curtis Rasmussen writes up the damage caused when a tree crashed through the ceiling of Jewel Winter's home near Hattiesburg, Miss. Rasmussen traveled from Utah to help the insurer process claims.