Group Forms to Lobby for Quake Victims : Relief: The coalition assails insurers’ dual-payee checks, which give banks control over payments to policyholders.

A newly formed coalition of quake-battered San Fernando Valley residents and business owners plans to take on insurance companies, lenders and others it believes continue to mistreat victims of January’s Northridge temblor.

The nonprofit group is calling itself Citizens Against Unfair Treatment by Insurance and Mortgage Companies (CAUTIM).

Board members include 16 representatives of area property owner associations and business organizations, said Sandy Miller, CAUTIM chairman.

“Collectively, they probably represent a good 40,000 to 50,000 people who have problems related to the earthquake involving insurance companies and lenders,” she said.

The coalition is also made up of representatives of other consumer groups that have been active in the nearly six months since the quake. They include United Policyholders, an Oakland-based nonprofit organization, and a new local group, Community Assistance Recovery (CARe), based in Northridge.

Miller, an Encino resident, is also chief of staff for Sen. David A. Roberti (D-Van Nuys). Miller stressed that Roberti is not connected with the group.

Members of the new consumer coalition are particularly angry at insurers that are issuing settlement checks payable to both policyholders and to their lenders. Some lenders are putting all or part of the money in escrow until repairs are made.

“I’ve had this particular problem myself,” Miller said.

Richard Close, president of the Sherman Oaks Homeowners Assn. and a CAUTIM organizer, said the group plans to file a lawsuit against insurers and lenders to recover an unspecified amount of damages by the end of the month.

Many quake victims have complained about the controversial practice of issuing dual-payee checks. They contend that lenders have no right to control the money if they didn’t require borrowers to carry earthquake coverage.

Most lenders insist that mortgagees carry fire insurance, but don’t require them to have earthquake insurance.

Soon after the Northridge quake, Insurance Commissioner John Garamendi said he would bar insurance companies from issuing the dual-payee checks.

Garamendi later changed his mind, citing a conflict between state insurance law and banking law on the issue. The insurance commissioner said he feared insurers might decide not to make any payments to quake victims until the issue was resolved in court.