Extension for Quake Claims Is Proposed

Homeowners could get an additional year to file Northridge earthquake insurance claims under a state Senate bill introduced Tuesday.

Senate Leader John L. Burton (D-San Francisco), who introduced the bill before the Judiciary Committee, said he wanted to give homeowners who had claims denied because they had not been made within a year of the earthquake a chance to be “fairly compensated for their losses.”

Insurance company representatives speaking in opposition said the bill would “open a Pandora’s box.”

‘Six years later, there is no way to tell if a crack in the foundation was from the earthquake or the home settling. This lends itself to fraudulent claims,” said Janine Gibford of the Assn. of California Insurance Companies.

The committee approved the bill on a bipartisan 7-2 vote but not before some heated exchanges.

Committee member Martha Escutia (D-Whittier) asked attorney Jeffrey Leacox, representing State Farm Insurance, if he was aware of “any fraud by insurance companies” in handling earthquake claims.

“None that I’m aware of, Senator,” answered Leacox, to which Burton sharply countered, “People got screwed.”

The one-year time limit has been one of the most divisive issues concerning Northridge earthquake claims. 21st Century alone denied as many as 2,000 claims based on the time limit, according to company documents released as the result of litigation.

But many homeowners said they could not have been aware of the full extent of the damage from the quake, which struck Jan. 17, 1994, until after the statute of limitations had passed.

Some sued their insurers, saying that the companies gave them a low-ball initial settlement and then refused to reopen their claims when more extensive damage was found.

Department of Insurance investigators who had access to insurance company files reported finding numerous instances of “improper application of the statute of limitations.” But Insurance Commissioner Chuck Quackenbush has refused requests to make the reports public.

Physician Matthew Conolly of Pacific Palisades told the committee that there were no indications that his house had suffered damage until several months later when the roof leaked after a heavy rain. He said his insurance company paid to get the roof fixed, but dismissed “out of hand” his suggestion that it might have been caused by the earthquake.

Later, cracks in the house’s foundation were found, but the insurer would not consider an earthquake claim, citing the statute of limitations. “We are left with a house we cannot afford to fix, a house we cannot sell,” said Conolly, who has filed suit against his insurance company.

Sen. Bill Morrow (R-Oceanside), who voted against the bill, said the courts are the place to argue time-limit cases. “This should be determined by judges,” he said.

Attorney Michael Bidart, who has represented several homeowners in suits against insurers, said this bill was mostly for people who believed that insurance companies when they said it was too late for them to make a claim.

“It’s for people who did not get their day in court,” Bidart said.