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The "Farmers Insurance "News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.

 

Saturday, April 2, 1994
Home Edition
Section: Business
Page: D-2

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
TIMES STAFF WRITER


Responding to homeowner complaints, state insurance regulators
Friday said they would move against insurers who continue to name
mortgage lenders as co-payees in earthquake claim payments.

But at least one major insurance company--Farmers Insurance
Group--said it has received few complaints and will continue to name
lenders as co-payees.

The State Department of Insurance said it has received scores of
complaints from homeowners whose lenders have been named co-payees on
insurance claim payments related to January's Northridge earthquake.

Many homeowners have faced delays in rebuilding as they seek their
mortgage lender's signature on the two-party claim checks sent out by
insurance companies, the department said. In one homeowner's case, the
mortgage lender was insolvent, and another resident's lender threatened
to keep the insurance payment to pay off the mortgage.

"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.




Descriptors: EARTHQUAKES -- LOS ANGELES; INSURANCE CLAIMS;

Copyright (c) 1994 Times Mirror Company

 

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