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Some in Hazard Areas Lose Coverage : Policies: 'It's tougher to get renewals . . . in areas considered potential fire areas, and the main reason is because we had the fire,' a Laguna Hills insurer says.

Momentum Builds in Laguna. ONE IN A SERIES

October 24, 1994|DEBBIE KONG | TIMES STAFF WRITER

Raymond Rubio, a firefighter for seven years, considers himself a victim of last year's firestorms.

His Laguna Hills tract home--seven miles from the Laguna Beach fire--is unscathed. But two months ago, Rubio was abruptly told that his fire insurance policy was being canceled. The reason: "a significant exposure to brush," a reference to a creek bed that lies a football field's length away from Rubio's front door.

Rubio, a Los Angeles County firefighter who battled the Malibu blaze and knows the ins and outs of fire prevention, was shocked.

"We're just homeowners in a residential area," said Rubio, 35. "I don't think I'm being fairly treated. I could see if I was in a place that had a major fire before, but they are kind of running the gun a little bit."

Rubio is one of the casualties in what insurance experts call an "industrywide crisis." Insurance companies are reeling from a quick succession of major disasters--first the Altadena fire, followed immediately by the Laguna Beach and Malibu fires, with the Northridge earthquake jolting the Southland less than three months later. Only two years earlier, some 2,700 homes were incinerated when fires swept across Oakland. Insurance companies have been hit with more than $10 billion in claims from residents whose homes were destroyed or damaged in the earthquake or fires.

Companies, fearing financial ruin, have begun to re-evaluate their clients, weeding out those whose property they deem at high risk for brush fires.

Rubio is not alone. The Laguna Beach City Council has identified three residents whose homeowner policies have been canceled, said City Manager Kenneth C. Frank. A spokesman for Fireman's Fund Insurance Co. said there were 36 non-renewed policies in the Laguna Beach area this year.

Since January's quake, Glenn Robinson, owner of Robco Insurance Services in Laguna Hills, has received about 30 to 40 calls from non-renewed homeowners begging him to refer them to a carrier.

"It's tougher to get renewals and insurance in areas considered potential fire areas, and the main reason is because we had the fire," Robinson said. "It's a tough market for homeowners. I've been in this business for 23 years and I've never seen it this tough."

There is no central clearinghouse that documents numbers of non-renewed insurance policies. However, the California Department of Insurance began tracking complaints after 58 homeowners in a single week said they had received non-renewal notices. Rubio's insurance company admits to dropping policies worth $3.5 million in premiums in the last five to six months, or about 10% of its total premiums, in an effort to reduce its risk exposure.

Rubio said he has lived in his two-story home on Sara Lane for three years without making a claim. In a cancellation letter his company said Rubio's home was situated within 300 feet of a dry creek bed. But after county fire inspector Robert Frick examined the neighborhood at Rubio's request, he told the homeowner it rated a 3 out of 10 on a scale of hazard zones and was not a fire risk. What the insurance company called a dry creek bed is the "Aliso Creek trail," where an asphalt bike trail lies along the edge of a four-foot-wide stretch of creek bed with running water.

Doris Kagley, 64, is another non-renewed policyholder. The Laguna Beach resident has been with Fireman's Fund for three years without making a claim. But in August she received a letter telling her that her policy would not be renewed because of her home's "proximity to hazardous brush/risk (areas) . . . it does not meet the underwriting guidelines of 1/4-mile brush clearance."

"I was shocked. At first I couldn't believe it," she said. Kagley's one-story home on La Mirada Street lies about two miles from the site of the fires last October. A canyon, about 10 yards away, is considered by the company to be a fire hazard. She pointed out that it has never caught fire in the 12 years she has lived there.

Kagley said her area may be a risk, but "almost everybody lives near a canyon."

"That would certainly do a lot of people in," said the former Orange Coast College counselor. "On one hand, I could see why they'd be wary. But on the other hand, I don't know why any companies are in the insurance business if they are afraid of risk. . . . I don't believe the insurance companies are broke. I think they have plenty of money. I don't think it's fair."

City manager Frank said officials have held three meetings with some major insurance companies to discuss what the city is doing to improve fire safety. The meetings were initiated by the homeowners' association in Mystic Hills, one of the areas hardest hit by the fire. "Most companies are very positive," Frank said.

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