The questionable use of price guides by insurance adjusters after Tropical Storm Isabel may be to blame for many of the low settlement offers reported by homeowners seeking to repair damaged houses from Maryland to North Carolina, insurance and construction experts say.

The pricing structure in computer software that some adjusters used after the September storm relies on estimates for new construction. But documents and interviews with policy holders show that the software was used after Isabel to work up settlement offers for repair or restoration jobs -- work that is generally more expensive.

Steven B. Larsen, the former Maryland insurance commissioner who last month released a study on Isabel-related insurance issues, said the discrepancy is the best explanation he's seen for the widespread complaints of low settlement offers.

"This looks like the smoking gun people have been looking for," Larsen said.

U.S. Sen. Paul S. Sarbanes of Maryland is looking into the questions about the software, an aide said yesterday. Maryland Insurance Commissioner Alfred W. Redmer Jr. has received information on the issue.

And Gary Moselle, the publisher of the National Construction Estimator, whose pricing guidelines for new construction are used in the software, has expressed his concerns in a letter to the Senate Banking Committee. Using his prices to adjust flood claims for the restoration of homes would produce estimates that are 25 percent to 50 percent too low, he wrote.

"It's easy to solvent weld PVC pipe and fittings -- unless that pipe is installed in an 18-inch crawl space under existing floor joists," Moselle wrote. "Work in tight quarters or an occupied building can reduce labor productivity significantly."

Nearly six months after Isabel hit, hundreds of victims in Maryland have yet to return to their homes, and local, state and federal officials along the East Coast have fielded thousands of complaints about flood insurance. More than a dozen bills addressing Isabel victims' plight, including their insurance struggles, are under consideration in the General Assembly.

The National Flood Insurance Program (NFIP) has received more than 24,000 claims, totaling more than $300 million, for Isabel-related damage in six states and the District of Columbia.

It is unclear how many settlement offers were produced using the software in question, which is produced by Simultaneous Solutions, a Florida company. But Larsen said yesterday that a review of documents he was given by flood victims during his study showed that nearly half were prepared with the "Simsol" program. Other Isabel victims in Maryland and North Carolina said in interviews that the forms their adjusters provided showed they were produced with the software.

John Postava, president of Simultaneous Solutions, confirmed that his company uses the National Construction Estimator data. But he said his system accounts for debris removal and other complications to bring the estimate closer to the cost of renovation work.

And, he said, the figures the Simsol system produces should be subject to negotiation.

"The price difference for things that are covered, you just work it out with the contractor," said Postava, an insurance adjuster. "Each contractor is going to have different overhead and profit margins. That's what adjusters do: They adjust."

Simsol's chief competitors, Xactimate and Marshall Swift/Boeckh, provide similar software, but officials at those companies said they conduct their own pricing research.

Georgia and Dale Poling, a Millers Island couple whose home was damaged in the storm, said their adjuster used Simsol software and initially offered them $45,000. But contractors estimated the repair costs would be more than double that, they said. After months of negotiations, they settled for about $80,000, still thousands of dollars short of what they needed. They and their two sons are still living in a Federal Emergency Management Agency (FEMA) trailer in their front yard.

Many Isabel victims did not negotiate, Larsen said. The NFIP requires flood victims to sign a "proof of loss" form within 60 days of an event. After Isabel, that deadline was extended for another 60 days.

In his report, Larsen said adjusters, agents and victims were so unfamiliar with the flood insurance program that many who had lost their homes thought that if they did not settle before the deadline, they would forfeit the right to make claims.

"As I was finishing up my report, [the deadline] was days or weeks away, and people were just beside themselves because they felt on the one hand, they were getting completely low-balled, but on the other hand, they felt and were being told they would lose the opportunity for getting anything," he said.

NFIP claims director James Shortley said the program does not regulate the software that adjusters use, explaining, "We would have to verify prices in every little town."

But the NFIP, in conjunction with Computer Services Corp., its chief subcontractor, produces price guides for each storm for adjusters to use as a reference, he said.

Computer Services Corp. issued a statement yesterday saying it uses information from a variety of sources to produce accurate guidelines.

A hearing on the flood insurance program, which is subject to periodic reconfirmation by Congress, was scheduled for yesterday but was postponed. Sarbanes spokesman Jesse Jacobs said the senator plans to question flood program officials about the software issue when the hearing is rescheduled.

Steve Kanstoroom, a Talbot County man who began researching flood insurance practices after becoming concerned about the settlement offers he and his elderly neighbors received for Isabel damage, said he gave Insurance Commissioner Redmer documents relating to the issue a month ago.

Redmer has said he is investigating several issues related to flood insurance but has declined to name them.

State Sen. Sharon M. Grosfeld of Montgomery County has said Redmer told her he was investigating software used in adjusting claims.

Complaints about Isabel claims are not limited to Maryland. Joe Thompson, president of the Hatteras Island Homebuilders Association in North Carolina, said homeowners will be unable to repair their houses for the prices the insurance companies are offering.

"A lot of these homes are older construction, and you know it isn't just a matter of fixing the damaged parts," Thompson said. "The shin bone's connected to the knee bone, and the knee bone wasn't damaged during the flood, but you can't fix the shin bone because the rest is ... rotten."