Quake Victims Denounce Insurers

With anger in their voices and uncertainty in their future, nearly two dozen Northridge earthquake victims Tuesday told a joint legislative hearing in Van Nuys that the quake turned their lives upside-down and that they felt betrayed by their insurance companies.

It has been more than three years since the January 1994 quake but several of the homeowners became emotional testifying about how their insurance claims were rejected because they discovered quake damage after a one-year deadline for filing claims had expired.

One man had to stop and compose himself in the middle of his testimony.

Perhaps the most heart-wrenching story came from Kathleen Jones, a retired Northridge schoolteacher whose husband died of cancer about a year after the quake.

Because she spent most of her time caring for her dying husband, Jones said, she failed to discover a cracked chimney and other hidden damage in her home until after the deadline.

The insurance company denied her claim, forcing her to rely on savings to pay for nearly $60,000 in quake damage.

“They didn’t care about the reasons,” an angry Jones said. “They were very cold about it.”

The hearing was held by Assemblyman Wally Knox (D-Los Angeles) and state Sen. Herschel Rosenthal (D-Los Angeles), who hope that the testimony will help persuade fellow lawmakers to adopt a Knox bill to make it easier for quake victims to submit claims after the deadline.

The legislation was defeated in the Assembly in May on a 29-41 vote, but Knox hopes the bill will pass when it is reconsidered in January.

During the hearing in Van Nuys, Knox also called on the state attorney general and the insurance commissioner to investigate complaints that Allstate Co. altered engineers’ reports and falsified information to reduce claim payments.

The hearing attracted about 60 homeowners and family members. Knox and Rosenthal listened sympathetically to the quake victims. But the lawmakers were less sympathetic to insurance company representatives who tried to defend themselves.

Insurance representatives told the panel that the Knox legislation would allow policyholders to file claims years after a disaster hits, making it difficult to determine the true cost of the damage.

To pay off late claims, the insurance companies said they would be forced to increase insurance rates for everyone.

Knox called such arguments “hogwash,” and accused the insurance companies of using scare tactics to oppose his legislation.

He also accused insurance companies of trying to cut their losses by using the deadline to deny thousands of legitimate claims.

But insurance representatives contended that the tragic stories that were heard Tuesday were not the norm. They said insurers have paid off nearly 99% of all 630,000 claims filed after the quake.

“Ninety-nine percent satisfaction is darned good service,” said Dan Dunmoyer, president of the Personal Insurance Federation, a group that represents six of the state’s largest insurance companies.

He also said that insurance firms in California paid out $12.5 billion in claims since the quake--more than three times the amount they have collected in premiums since 1972.

“We have made an effort to meet our obligations,” Dunmoyer said.

The debate centers on language in all earthquake insurance policies that requires policyholders to submit claims within 12 months after the “inception of the loss.”

A 1990 Supreme Court ruling on a suit filed by a Tarzana couple against their insurance company defined “inception of the loss” as the day that damage occurs or when a homeowner discovers or should have discovered the damage. Knox’s legislation would insert that definition into state law.

In effect, Knox said the law would give policyholders a basis on which to file claims even after the one-year deadline has passed.

But consumer advocates and insurance companies argued that even if Knox’s legislation is adopted, there is still no guarantee that insurance companies would approve all claims filed after the one-year deadline.

“The holes in the language in the [Supreme Court ruling] are so large, that insurance companies can drive a truck through,” said consumer attorney Glenn Kantor.

For many of the homeowners who testified, the debate was not about policy and politics. Instead, they worried about how to put their lives back together in the continuing wake of the Northridge quake.

Wanda Raynard, 72, of Northridge said she is continuing to battle her insurance company over her damage claim although her insurance company has assigned 13 different adjusters to her claim and has inspected the house nine times.

“I’m not just policy number 7003588,” she said. “I’m a human being.”

Bernard Goldstein of Chatsworth said his insurance company deliberately “rigged” the inspection to pay him less than half of what he needs to fix his house. He said he has since had to sell the house.

“I have lost my house,” he told the panel, his voice trembling with anger.