Northridge Quake Victims Sue State Farm

A group of Northridge earthquake victims filed a cluster of lawsuits against State Farm Mutual Automobile Insurance Co., accusing the nation’s largest property insurer of handling claims unfairly and defrauding policyholders by reducing their earthquake insurance coverage without proper disclosure.

Two of the three suits--all filed Monday in Los Angeles County Superior Court--seek class-action status and could involve more than 100,000 State Farm customers in California and across the country, plaintiffs’ lawyers said.

Michael Bidart, the Claremont-based attorney for the policyholders in all three cases, said that in 1986, State Farm without notice switched its earthquake policies from “guaranteed replacement cost” coverage to a more limited version covering only up to a stated dollar limit.

Because the change was not explained, Bidart said, many people who renewed their policies year after year found themselves drastically underinsured when the Jan. 17, 1994, quake struck.

That issue is the subject of one of the class-action suits, while another focuses on the way State Farm withholds a portion of claims payments during the rebuilding process.

The third suit, by 105 earthquake victims, concerns a wide array of allegations that mainly concern how their claims were handled, Bidart said.

State Farm spokesman Bill Sirola said the company would not comment on the lawsuits except to say that “well over 95%” of the insurer’s 120,000 Northridge earthquake claims have been settled to customers’ satisfaction.