Quake Area Gets Insurance Hold

Insurance Commissioner John Garamendi issued an emergency directive Tuesday barring insurers from canceling or refusing to renew any insurance policies in the earthquake-affected area for 60 days after the Jan. 17 quake.

Garamendi also announced that State Farm Insurance Co. has backed off on its previously announced 18-county moratorium on selling new earthquake insurance, agreeing to limit the moratorium to five full counties--Los Angeles, Orange, Ventura, Santa Barbara and Kern--and parts of two others, Riverside and San Bernardino.

The emergency directive is meant to provide a special grace period for the thousands of low-income people--especially auto insurance policyholders--who continually face cancellation for non-payment of premiums. Some insurers have already created such grace periods voluntarily so that people will not lose their coverage at a time when they may be hard-pressed because of the 6.6 temblor.

The order, which expires March 18, is retroactive to Jan. 17, meaning that any consumer whose policy was canceled for non-payment between the quake and Tuesday is automatically reinstated with no interruption in coverage. Included are Los Angeles, Orange and Ventura counties.

Garamendi had criticized State Farm, the state’s largest insurer, for extending a moratorium on new earthquake policies to cities up to 250 miles away. A State Farm spokeswoman said its original moratorium was based on early damage estimates and that the company scaled back when a more accurate picture emerged.