Garamendi Lifts Post-Quake Rule Against Insurance Cancellations

State Insurance Commissioner John Garamendi, bowing to insurance industry concerns, has quietly rescinded an emergency order that barred insurers from canceling policies for non-payment in the aftermath of the Northridge earthquake.

Garamendi’s Jan. 31 directive, covering all of Los Angeles, Orange and Ventura counties, meant that people from San Clemente to Ojai to Palmdale would enjoy a 60-day holiday from insurance bills, regardless of whether they were affected by the Jan. 17 quake.

But in a letter to insurers dated Monday, Garamendi explained that his order hadn’t actually been an order after all.

“It was designed to provide illustrative guidelines, and was not designed as a mandatory procedure applicable to all circumstances,” he wrote.

The about-face occurred after a meeting last week, during which insurance industry officials “talked to the department about the vast stupidity of (the order), how it was completely unworkable and probably illegal,” John Millen, spokesman for Farmers Insurance Group, said Tuesday.

Nettie Hoge, an attorney with the Insurance Department, acknowledged Tuesday that Garamendi’s directive had been issued “with questionable legal authority.”