20th Century Cancellations Investigated

State insurance officials are investigating whether earthquake-battered 20th Century Insurance Co. is illegally canceling homeowners policies, leaving some customers unable to obtain replacement insurance.

Insurance Commissioner John Garamendi said Wednesday that Woodland Hills-based 20th Century has canceled an unknown number of its 240,000 homeowners policies, some only days after agreeing last month to renew them for two more years.

That agreement caused many other companies to limit the number of new homeowners policies they issue in the state--or to stop selling them altogether.

Now, that ripple effect is leaving homeowners whose 20th Century policies are being canceled stranded.

“We’re very much aware that the insurance industry in many different ways is attempting to reduce its quake exposure,” said Garamendi.

“Some of those mechanisms are legal; others are not. The ones that are not we will stop,” he said.

The investigation is headed by Nettie Hoge, the Insurance Department’s chief of consumer services.

“We’re going to very carefully scrutinize whether they (20th Century) are circumventing either the order or the intent of the order,” said Hoge, a lawyer who previously worked for Consumers Union.

Hoge said the Insurance Department has received about 10 formal complaints from 20th Century customers who have lost their homeowners coverage since the Jan. 17 quake.

But others think the problem is far more widespread.

“About 10% of our 350 members have had their homeowners policies canceled, and several others have been told they might be carried to their next renewal date, but then not renewed,” said George Kehrer, executive director of CARe, a Northridge-based consumer group formed since the quake.

Extrapolating from what has happened to his members, Kehrer reasons that several thousand more 20th Century policyholders are probably being canceled or not renewed.

“They’re playing games with people,” he said.

Woodland Hills-based 20th Century said through a spokesman that the company hasn’t kept tabs on the number of homeowners policies it has canceled since the quake.

The spokesman added that the company’s reasons for canceling policies are confidential between the insurer and its policyholders.

In general, it has always been nearly impossible for homeowners who still have unresolved claims against one insurer to get coverage from a new company. That has been truer than ever since the Northridge quake, according to state insurance officials.

Meanwhile, about 200 outraged 20th Century policyholders met Wednesday night at the First Presbyterian Church in Granada Hills to demand action.

“We’re tired of being taken advantage of,” said Michael Ramirez-Mares of Granada Hills, president of 20th Century Policyholders Quake Action Group.

He signaled that the group may try to pressure 20th Century by threatening its very lucrative car insurance business, which the company will keep.

“How many of you also have 20th Century car insurance?” he asked the audience. Virtually everyone raised their hands.

Next Ramirez-Mares asked how many were thinking of “canceling that car insurance when this mess is over.” This time, at least half raised their hands.

The state’s ninth-largest insurer, 20th Century announced in June it would withdraw from the California homeowners market, citing $600 million in quake-related claims that wiped out two-thirds of its cushion against future losses.

The company’s agreement with the state also calls for it to phase out its quake policies over the next year, in addition to the requirement to provide homeowners policies for two more years.

At Wednesday night’s meeting organizers handed out form letters addressed to Garamendi urging him to order 20th Century to renew quake coverage of any policyholder who still has a pending claim from a policy that was in effect when the Northridge temblor struck Jan. 17.

To minimize the impact of the withdrawal on 20th Century customers with existing homeowners coverage--including 90,000 with quake protection--Garamendi ordered the company to offer them two more annual renewals.

But less than a week after agreeing to comply with the order, 20th Century launched a seemingly aggressive drive to cancel homeowners policies for a variety of reasons.

For instance, some customers’ policies were canceled because they had quake damage .

One cancellation notice obtained by The Times reads “Your residence sustained damage in the recent earthquake(s) and, therefore, does not meet our underwriting guidelines. The earthquake damage has caused physical changes in the property insured against, which has resulted in the property becoming uninsurable.”

That notice is dated June 14, just five days after the Insurance Department insisted that 20th Century continue protecting existing customers.

At the time, Garamendi said in a news release that the company’s existing homeowners policyholders “should have an average two and a half years to get a new policy.”

Other customers were told their homeowners coverage would be canceled because they had too many claims last year.

Marcella Contreras of Mission Hills is one of those. She has been without homeowners insurance since her 20th Century coverage ceased July 1.

Contreras said she had had her homeowners policy with the company for eight years before her first claim, for $710 of wind damage, last November. Since then, 20th Century has either paid or agreed to pay $30,000 for quake damage and $99,000 to a friend of Contreras who was bitten by the family’s nervous, 110-pound Rottweiler the day after the quake.

“What do we do? We can’t get anybody to cover us because we have quake damage,” she said.

Contreras said that so far, she has received only $5,000 from the company, not enough even to rebuild a wall around her back-yard swimming pool.

“My biggest fear is some little kid will get in there and drown,” she said.