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|Tuesday, October 3, 2000
Bill OKs Reopening of 1994 Quake Claims
Thousands of homeowners who suffered property damage in the 1994 Northridge earthquake will be able to file revised claims with their insurance companies under legislation signed by Gov. Gray Davis, attorneys and insurance industry officials said Monday.
SB 1899, signed late Saturday, allows most earthquake insurance policyholders to submit claims by Jan. 1, 2002, even if they had previously missed their filing deadline.
To be eligible, however, policyholders must have contacted their insurer about the damage before Jan. 1 of this year.
Supporters of the bill said insurance companies typically rejected claims submitted more than a year after the Jan. 17, 1994, quake. In some cases, however, damage was not discovered until several years after the quake.
State officials could not give an estimate of how many people would be affected by the bill, but insurers said it could easily be in the thousands.
"Based on our experience, we think very few of our customers are dissatisfied," said Kitty Miller, a spokeswoman for Farmers Insurance Group. "But this opens the door for many people to reopen claims--in our case 32,000 of them."
Brian Kabateck, a Century City attorney who consulted on the legislation, said he believes at least 10,000 policyholders can potentially submit revised claims, based on his discussions with insurers and fellow attorneys.
"I think this is very big," Kabateck said. "I think finally, hopefully, thousands of people will get a chance to have their claims reviewed and adjusted."
Jacalyn Williams, president of a homeowners association for a 12-unit condominium complex in North Hills, said she welcomed the new law. Her association has struggled to pay for repairs the insurance company said were not needed, she said.
"They told us, 'Basically your building is still standing, so consider yourselves blessed and have a nice day,' " Williams said. "We requested to reopen the case, because we found out we had windows that don't close right anymore, cracks in the stucco that we didn't see immediately."
"All of a sudden things became more evident," Williams said. "We had paid insurance for years and years but our damage was not covered at the time. They didn't handle that."
To be eligible to file a revised claim, policyholders must already have submitted a claim that was denied because it was not filed in a timely manner.
In some cases, insurers did pay policyholders who didn't discover damage until more than a year after the quake, but attorneys say thousands of other legitimate claims were denied for missing the deadline.
The bill, submitted by Senate President Pro Tem John Burton (D-San Francisco), does not apply to those who won court judgments or whose attorneys have signed settlement agreements in connection with the quake.
Those provisions were designed to block frivolous or fraudulent claims. Despite the narrow scope of the bill, SB 1899 supporter Assemblyman Jack Scott (D-Pasadena) said the action was a matter of fairness for those who discovered damage more than a year after the quake.
"This law helps those who were victims of a very strict interpretation of the rules," Scott said. "It balances the scales."
Ronald Beldner of Granada Hills said inexperienced claims adjusters low-balled the damage estimate to his home--forcing him to pay more than $15,000 for repairs that should have been covered by insurance.
"They sent three gentlemen--one from New Orleans, one from New Jersey and one from Chicago," Beldner said.
"They said they were used to hurricanes, tornadoes and ice storms. They didn't know what structural damage to look for." Damage Believed Underestimated
Alan Schimmel, a Sherman Oaks attorney who has 19 cases pending against Farmers and its affiliates, said that many insurers underestimated damage--and homeowners did not find that out until after the claim deadline had passed.
"A lot of the injury here was insurance companies going out to homes and saying you don't have damage or you don't have enough damage to meet your deductibles," Schimmel said. "People didn't think they had damage and when some problem occurred the insurance company said, 'You're too late'," Schimmel said. "This is really what this legislation is supposed to address."
Ric Hill, a spokesman for 21st Century Insurance Co. disputed Schimmel, saying his company denied 533 quake damage claims, or about 2% of those filed. "It would be our expectation that very few, if any, of those cases would require reopening," Hill said. "In the process of handling those claims, the company has already paid out more than $1.1 billion."
State Farm Insurance attorney Clarke Holland said homeowners should be obliged to file claims in a timely manner. "The presumption they didn't have enough time doesn't take into consideration when responsible homeowners ought to be fixing their properties," he said. "Our position is we did this right to begin with."
The law grew out of a Times investigation that detailed secret settlements negotiated by former Insurance Commissioner Chuck Quackenbush with insurers, based on studies of insurance companies' claims-handling practices.
Quackenbush used some of the $19 million he collected from the insurers to advance his ambitions for higher office but resigned in July under threat of impeachment when those abuses were detailed.
Kabateck said that during the hearings that ultimately led to Quackenbush's resignation, legislators got "a real wake-up call" about how many of the earthquake claims were handled.
"The Legislature suddenly realized that lots of people had been victimized by the insurance industry, in the manner in which they [handled] their claims," Kabateck said.
"It became clear to them that something had to be done."
A state Insurance Commission spokesman said policyholders could call the state Department of Insurance's local consumer service hotline at (213) 897-8921 with questions related to filing revised claims.
Encino-based attorney Howard Snyder said the bill should have required insurance companies to notify homeowners that they may be eligible. Policyholders May Not Know
Snyder, an attorney in 17 class-action lawsuits stemming from the earthquake, said one in five policyholders who were denied coverage may not even know that they have more money coming to them.
George Kehrer, president of Community Assisting Recovery, said homeowners have been frustrated for several years by poor handling of their claims. He said insurance companies conducted extensive research, but most times it was too late for homeowners to receive compensation. He hopes the bill will settle the score.
"With the number of claims this bill is going to reopen, it will be almost like another earthquake hit," Kehrer said. "The Department of Insurance has discovered that several billion dollars in insurance money was left on the table and that will be paid out now."
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