Browse archives: 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | 1997 | 1996 | 1995

Published on 08/05/1996 All articles from this issue

Earthquake coverage stalled in Sacramento again

printer friendly version

By Eric Morley

Special to the Town Crier

The long-awaited, insurer-backed and California Association of Realtors-supported plan to create a $10.6 billion state agency to offer earthquake insurance to California homeowners is stalled in the state Senate after approval by the Assembly.

Since the Northridge quake, the availability of homeowner's insurance has been increasingly limited.

Faced with unexpectedly large losses in the event of a substantial earthquake, the state's insurers re-evaluated their risk positions and limited the amount of new policies written.

The plan was strongly opposed by Consumer Union as an insurance industry bailout. Backers of the plan said that without it, one million policies would be canceled or not renewed this year and more homeowners would have trouble finding affordable earthquake insurance in the future.

The Assembly approved two compromise bills written by a six-legislator conference committee that has been meeting since April to devise the plan approved in concept by the Legislature last September.

The overall situation has been exacerbated by the failure of the state Legislature to enact a working California Earthquake Authority (C.E.A.) and Insurance Commissioner Chuck Quackenbush's decision to no longer allow all homeowners access to insurance coverage available through the state's FAIR plan.

Insurers sought an end to the state law that requires them to offer quake insurance with homeowner's policies.

While linkage - the requirement that earthquake insurance be offered with homeowner's coverage - has been viewed by the insurance industry as contributing to the availability crisis, the state's insurers have indicated that de-linkage will not necessarily bring them back into the market.

The California Association of Realtors' board of directors identified the homeowner's earthquake insurance issue as its No. 1 priority at the June board meetings in Sacramento and has been lobbying the legislature for passage of the C.E.A.

For more information, call 1-800-949-7929 or e-mail to emorley@penwest.com.