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.
RATE HIKES MAKE QUAKE COVERAGE TOO COSTLY TO BUY
Saturday, February 3, 1996
IN THE articles about the quake insurance crisis in the Jan. 27 Mercury News, one aspect was not mentioned, namely the way insurance companies have been effectively forcing homeowners to drop their earthquake coverage by onerous increases in rates.
In my case, Farmers Insurance raised the premium on my Mountain View townhouse tenfold over last year, such that the earthquake premium was set at three times the level of the normal coverage for fire, theft, etc.
I was encouraged to drop the coverage (a postcard for my reply was conveniently included). My broker faithfully followed the company line, advising that I drop the coverage. (I am, by the way, a model customer, having never made a claim against my house or earthquake insurance, even after the '89 quake, and my townhouse is eminently insurable.)
A person at the California State Insurance Department with whom I spoke confirmed that rate increases, on average twice as high as in previous years, had been approved for earthquake coverage, but that in localized (earthquake-prone) regions, the increases (apparently at the discretion of the insurance companies) might be larger. There was, in his opinion, nothing I could do about it.
In the end, I was forced to drop my earthquake coverage rather than pay the profiteering (and quite unaffordable) rates foisted on me by Farmers.
I can only hope the insurance commissioner and legislators enact a state or federal program to provide emergency earthquake coverage.
Our condominium is a good place to live. We have congenial residents who are courteous and considerate of each other. One could knock on any door and be greeted and helped if help were needed. It is similar to the old-fashioned neighborhood where you can borrow a cup of sugar from next door. It is also very private if one prefers or chooses privacy. It is comforting to live where everyone knows your name and cares.
Our condo was built sturdily in the early '80s. The board of directors are conscientious (four engineers and me). We do not have parking or pet problems. Our dues are spent judiciously with the complex benefiting from a 100 percent collection policy.
I do admit that if one is a sour old grouch, unneighborly and a troublemaker, condominium living would be uncomfortable. It is important to understand community living - it was and will always be a proper civilized way to co-exist. Aggravation, problems and tumult can occur in single-family neighborhoods, only there it will be in isolation. Condominium owners' problems are given to the board and the management company to solve.
Of course condominium living is only as good as its board. A prospective buyer should sit through a homeowner's meeting and read minutes of past minutes.
Pilot cites a 1987 article. It is now 1996. He claims homeowners association may not keep their members fully informed. Frankly, this would be illegal because all the condominium affairs and business must be conducted in open meetings.
Marjorie Amelia Loebel
The study reviewed by Inman, ''Fixing CEQA: Options and Opportunities for Reforming the California Environmental Quality Act,'' examines the impact CEQA, the state's pre-eminent environmental law, has had on development in California.
But, by selecting certain findings in the report, Inman seems to be saying that CEQA's costs are inconsequential and they are only infrequently imposed to satisfy CEQA. That is simply not the case.
CEQA's myriad appendixes and analyses add as much as $200,000 to the average cost of completing an Environmental Impact Report (EIR), cited in the study as being approximately $39,000.
CEQA ''processing'' time - typically a year or more - adds cost by extending the duration of a home builder's acquisition and construction loan.
Though Inman also says EIRs are rarely required by local governments (and the study bears him out), he fails to mention that impact reports aren't CEQA's only implementation proxies. In fact, according to the ''Fixing CEQA'' study, California's law distinguishes itself from other states and the comparable federal environmental impact law by requiring analyses of virtually anything connected with development.
Accordingly, CEQA, with or without EIRs, becomes a dominant influence on local land-use policy and helps produce mitigation fees that in some communities run as high as $40,000 per home.
Finally, the story leaves out another substantial CEQA cost: litigation.
As the ''Fixing CEQA'' report shows, lawyers are making a bundle as environmental lawsuits in California are more than 10 times greater than all other states except New York.
Where do all of these costs go? Right into the price of a home.
It's not surprising then that California has the highest cost for new housing in the nation and one of the lowest rates of homeownership.
California's home builders want to protect our environment, but want environmental requirements to be balanced with economic needs.
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