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Liquidation Order Clears Way to Pay Insurance Claims

Times Staff Writer

A court order to liquidate the bankrupt Coastal Insurance Co. was issued Monday by a Los Angeles judge, clearing the way, after more than a month, for claims against Coastal’s 200,000 California auto insurance policies to be honored by a state-appointed guarantee association.

The director of the California Insurance Guarantee Assn., John W. Gates, said claims payments on Coastal policies should resume within two weeks, offering the prospect of relief for hundreds of persons whose claims have remained unpaid.

Since Feb. 2, when state Insurance Commissioner Roxani Gillespie placed Coastal into conservatorship, hundreds of car repairs and medical treatments for which Coastal was responsible have gone unpaid. In some cases, body shops would not proceed with repairs, or medical treatments had to be deferred.

Insurance Department officials have estimated that about 700 claims are made each month against Coastal’s policies, so, in the roughly six weeks of a claims-paying hiatus, about 1,000 claims may go unpaid.

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Unopposed by Company

The request by Gillespie to terminate Coastal Insurance went unopposed by Coastal before Superior Court Judge Dzintra Janavs, and Janavs immediately took the action.

Meanwhile, the head of a consumers group, Steven Miller of the Insurance Consumer Action Network, said he was seeking to intercede on behalf of a San Fernando Valley medical clerk whose repaired car has been held by the owner of a Van Nuys body shop for the last two weeks because a Coastal check issued for the work had bounced.

The clerk, Diana Ruiz, said Monday in an interview that on Feb. 14, 12 days after Coastal was placed into conservatorship, the owner of Harry’s Body Shop, Harry Hezar, accepted a Coastal draft as payment for $2,600 in repairs and let her drive her car home.

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However, she said, on Feb. 24, Hezar called her and said there may have been a fault in the repairs and asked her to take the car back in.

When she did, Ruiz said, Hezar seized the vehicle, padlocked it, told her that the Coastal draft had bounced and that he would not release her car until he received full payment.

Different Version

Hezar tells a somewhat different story. He said in an interview Monday that Ruiz had called him and wanted to take the car in for an adjustment. But he confirmed that when it got to his shop, he had padlocked it and still refuses to release it.

Hezar said he had provided another car and a driver to take Ruiz, her husband and their three small children home after seizing their car. Ruiz, Hezar said, had been so angry that she kicked the vehicle after it arrived at her home.

Hezar said his lawyer had advised him to release the car on grounds that when the Guarantee Assn. starts paying Coastal claims he will get his money. But, he said, he is holding it because he is not satisfied of the certainty or timeliness of payment.

Miller and Ruiz said the body shop owner is being unreasonable and Miller said the Ruiz story is only one of a number of hardship cases he has heard lately.

The insurance commissioner’s filing with the court said Coastal Insurance was at least $39.8 million in the red. Since the conservatorship, Coastal’s parent company, Advent Management Co., has also filed for bankruptcy.

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Harry O. Miller, the chief executive of both Coastal and Advent, was responsible last year for the companies’ giving or lending a total of $5,249,852 in their assets to support Proposition 101 on the November ballot. The proposed insurance initiative, one of five on the ballot, won a scant 13% of the popular vote.


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