Quake Effects Still Felt on Home Policies

Nearly a year after the Northridge earthquake, area home buyers are still having problems purchasing home insurance.

Since the Jan. 17, 1994, earthquake, home insurance companies have reported a $9-billion loss in claims, according to the California Department of Insurance.

“The quake really knocked a shock into the insurance industry, said Frederick Pilot, editor of Smart’s Insurance Bulletin, a San Mateo-based newsletter that monitors the industry. “Now (the companies) are feeling much more conservative about earthquake risk.”

Beginning in June, several large insurers stopped issuing or began limiting new policies, leaving buyers, especially first-time buyers, with fewer choices. State law requires insurance companies that issue homeowners’ policies to also issue against earthquakes.

Because companies representing 60% to 75% of the market have in one way or another restricted their writing of coverage, the potential homeowner is left in a quake-related quandary.

Finding home insurance used to be easy, said Tanya Grimes, a real estate agent with William Wilson in San Marino. “Now, there’s hurdles all over and you have to start early in the transaction,” she says.

Many buyers have turned to independent agents to help them find insurance. Bruce Newsom, an independent agent in Pasadena, said he got a surge in calls shortly after the quake, but that the number of calls has let up recently. He now gets anywhere from 15 to 25 inquiries a week from people looking for insurance.

Of those callers, he’s able to accommodate four or five. Success depends on many factors, including the home’s location, value and age, the soil type and what kind of coverage the buyer wants.

San Gabriel Valley insurance agents agreed that insurance is available, but that home buyers have to shop around.

Marge Mjelde, an agent with Baldwin Realty Sales in Pasadena, said she has managed to find insurance for all of her buyers. She suggests that those who already own homes stay with their current company, if possible.

John Fairbanks, an agent with Prudential Preferred Properties in Pasadena, said a good agent would not let an obstacle such as home insurance stand in the way of a sale. The insurance crisis has presented problems, Fairbanks said, but nothing that isn’t solvable. Fairbanks said he did experience delays in getting properties through escrow in the middle of the year when companies first began restricting policies.