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|Saturday, April 2, 1994
State Says Quake Co-Payments Illegal; Damage:
Warning issued after homeowners say they have to have
mortgage lenders sign off on their checks.;
By: JESUS SANCHEZ
"Some homeowners who've started construction now find they can't get their hands on the money," said Insurance Commissioner John Garamendi. "This is outrageous."
Garamendi said lenders have no right to be named co-payees since earthquake insurance is purchased voluntarily to protect the homeowner's interest in the property. As a result, the department plans to issue a bulletin to all insurance companies by April 11 to advise them that such co-payments are illegal and subject to sanctions.
Insurance companies are concerned that they might end
up making two payments--one to the lender as well as the
policyholder--if, for example, the homeowner runs off
with the claim payment. But Garamendi said those concerns
would be addressed in the state's bulletin.
Copyright (c) 1994 Times Mirror Company
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