Fights Drag Out Over Some Quake Claims : Recovery: Thousands of cases remain in dispute. One woman says pursuing a settlement ‘is like a full-time job.’

Sara Bacon’s homeowners insurance policy spans 39 pages, but 18 months after her two-bedroom home in Reseda was splintered by the Northridge earthquake, she has come to believe that her insurance company left one clause out.

That clause, in Bacon’s words, would read: “We will do our best to cover your loss, but we will fight you on everything . . . and it’s going to take years to settle.”

Bacon’s insurance company, Allstate, said Bacon has declined offers to go to mediation, and they correctly point out that Allstate has paid Bacon $58,000 for damages to her house and its contents.

Since the Northridge earthquake, insurance companies have been inundated with 430,000 quake-related home, auto and commercial claims. About 95% of those claims have been settled, and $12.5 billion in insurance money has been paid out, according to the state Department of Insurance.

But for Bacon and thousands of others still waiting to finish settling their claims, the earthquake might as well have happened last week. Their homes remain cracked, and their days are interrupted by a ceaseless stream of insurance paperwork, inspections and phone calls. Basic components of their lives--such as where they call home--remain mired in uncertainty.

Bacon, 37, still lives with her husband and two young children in their home in Reseda, although the beige stucco house looks a bit like a mishandled Easter egg. A structural engineer has traced dozens of fissures on the outside of the home in blue crayon, and an inch-wide crack stretches around the base of the house like an unsightly belt.

No repair work has been done, and she and her insurance company are more than $100,000 apart on how much it will cost to fix. “There wasn’t supposed to be so much of a fight,” she said.

Many unsettled claims were previously closed, but reopened when additional damage was discovered during repair work. In some cases, insurance companies or policyholders are clinging to unrealistic demands. In others, homeowners failed to file claims until recently.

At the time of the Northridge quake, only about 45% of policyholders in Southern California had earthquake coverage. But even those who purchased the extra coverage sometimes face years of frustration before they collect.

Bacon says attempting to settle her claim “is like a full-time job.”

To date, she and Allstate have corresponded 70 times, she said, and spoken by phone 54 times. Communication with her contractor and various consultants accounts for another 13 letters and 94 phone calls. Then there are the 21 visits her claims adjuster and various experts have paid to her house, she said.

On a visit in October, a structural engineer hired by Allstate told her that tree roots had grown through the cracks in her home’s foundation, which meant that the cracks predated the quake, she said. Skeptical, she crawled under the house with him to take a closer look.

Wearing overalls, a hooded sweat shirt and a bandanna across her face, Bacon dragged herself across the dirt in the 18-inch crawl space under her house. The supposed roots, she said, turned out to be metal wires embedded in the house’s foundation when it was poured in 1952.

“I called their bluff by going under there,” she said. “What if I hadn’t done that?”

For their part, Allstate officials counter that Bacon has been dragging her heels through the settlement process.

“This is a situation where Allstate is really trying to come to an agreement,” said Peter Klee, an attorney who represents the company. The key sticking point, he said, is that Allstate does not believe it is obligated to pay for costly soil work under the house.

Bacon claims that the soil was weakened by the quake, and that failure to correct the soil problems would undermine any repairs to her house. Allstate acknowledges the soil problems, but Klee said they predate the earthquake.

Meanwhile, Bacon and her family continue on a bumpy path. She said her 6-year-old daughter has nightmares about the quake, that the family’s plans to buy a bigger house have been put on hold, and that all the wrangling with Allstate has strained her marriage.

“Even my closest friends say take what [Allstate] offers and get the stress out of your life,” she said. “But then what? We’d have a new coat of paint on the outside, but our home would be unsafe.”

Theo Miller, 69, has spent the past seven months waiting for her contractor and insurance company to agree on how to finish repairing her spacious Woodland Hills home of 32 years. For now, Miller lives in a dank West Hills apartment that is no substitute for her four-bedroom home, which has a sparkling swimming pool and a sweeping view of the Valley. The house has been virtually untouched since December, although Miller visits twice a week to fetch her mail and pull a few weeds.

After the quake, as she lay in bed at night, Miller says she could hear the dresser in the corner of her bedroom sinking. She found out why in December, when workers found deep cracks in the concrete slab on which her house sits.

By then, Miller had already settled with her insurance company, Woodland Hills-based 20th Century, for about $53,000, and had moved out of her house in November to let repair work begin. But the discovery of the cracks brought repair work to a halt, and her contractor and insurance company have been deadlocked on how to proceed.

It wasn’t until late February, Miller said, that 20th Century agreed to her contractor’s demands that a structural engineer examine the cracks. Then it took another two months, she said, for her to get a copy of the report--which recommended that the damaged portions of the slab be removed, replaced and reconnected to the rest of the foundation.

Although both sides agreed on the scope of the repairs, they could not agree on the price. Her contractor, Bob Henry of the R. A. Henry Co. of Glendora, offered to do the slab work for $19,535. Henry said 20th Century insisted that the repairs could be done for $5,474.

20th Century declines to discuss specific claims. But company spokesman Rick Dinon said cases such as Miller’s serve as examples that “the task [of settling claims] is not always easy, and it is not without differences of opinion.” Cases still unsettled, he added, “are not representative of the overwhelming number of earthquake claims.”

(20th Century has faced its share of quake problems. The company’s quake-related losses exceed $864 million, and it is exiting the homeowner insurance business.)

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Miller thought the logjam might break last month, after she offered to pay a portion of the amount in dispute, and after her contractor offered to let 20th Century hire another contractor to perform the slab repair.

But this month Miller got a letter from her insurance company. It reads: “We are continuing the process of considering the claim you presented. We wish to notify you that additional time is required.”

Meanwhile, 20th Century continues to pay about $2,000 a month to cover Miller’s rent at an apartment building, and to keep her belongings in storage. But Miller’s living expenses coverage expires in November, and she frets that little will have changed by then.

From the outside, Miller’s hillside home looks inviting. Most of the stucco cracks have been patched and painted, and the swimming pool is full. But inside, the rooms are barren and a thin layer of dust has settled on the exposed concrete floors.

“When I moved out, the goal was for me to be back home by [last] Christmas,” Miller said. “It boggles the mind that I would be in a dilemma like this.”