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Bill to Ease Quake Insurance Time Limit Fails

May 27, 1997

The Assembly last week voted down a bill by Assemblyman Wally Knox (D-Los Angeles) that would have prevented insurance companies from automatically denying earthquake damage claims simply because they were filed more than one year after the 1994 Northridge earthquake.

The Knox bill was rejected in a 41-29 vote.

Knox said legislators "had been overwhelmed with lobbying from the insurance industry in a highly organized and very quiet effort."

Knox introduced his bill in February in response to hundreds of lawsuits filed by San Fernando Valley homeowners against 20th Century Insurance, Allstate, State Farm and other carriers who denied claims because of their controversial interpretation of a one-year time limit to file an earthquake damage claim.

Consumer advocates argue that a lot of earthquake damage is hard to detect, and that final discovery of the full damage may not occur until after repairs begin on a home. But many insurance companies routinely denied supplemental quake damage claims because they were filed more than one year after the quake.

Last month, state Insurance Commissioner Chuck Quackenbush said he supported Knox's bill because some insurance companies have wrongly interpreted the time limit.

However, insurance companies contend they are following the law. The debate over time limits has been a cornerstone of many lawsuits making their way through the courts.

Knox said he would reintroduce a modified version of his bill by June 6.

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