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Condo Owners Often Denied Earthquake Insurance

POSTED: 5:12 pm PDT August 28, 2007

UPDATED: 7:41 am PDT August 29, 2007

LOS ANGELES --
That recent deadly earthquake in Peru makes many of us in California
wonder, when will the next big one hit here in the Southland? But for one
type of homeowner, the option of earthquake insurance is disappearing. Are
you at risk? Ana Garcia reports.

(Following is a transcript of the report.)

EMILY MURA-SMITH: They said in their cancellation notice -- this is
due to nothing you've done or anything, we are just no longer providing
insurance.

ANA GARCIA: Bad news being delivered in letters like this to many
condominium associations all over California.

BLOSSOM ARLIN: I can't get earthquake insurance.

Emily Mura-Smith and Blossom Arlin own condos in this five unit
building in Studio City. In June, their insurance company XL Specialty
refused to insure the building and common areas anymore. The company
announced it was pulling out, no longer covering building like this.

MURA-SMITH: He can't find anyone to give us coverage.

JIM ARMITAGE: It's causing a lot of turmoil for these associations.

ANA GARCIA: Jim Armitage represents the Independent Insurance
Agents of the West -- an association with 7,000 members.

JIM ARMITAGE: We are looking down the barrel of possible major
earthquake.

ANA GARCIA: Armitrage says reports like these and expensive
disasters like the Lake Tahoe fire, California's susceptibility to
mudslides, and the inevitability of another major quake has insurance
companies jittery.

INSURANCE COMMISSIONER STEVE POIZNER: I've gotten an earful from
condo owners. It's a really terrible problem.

ANA GARCIA: Because condo buildings are not covered under the
California Earthquake Authority established after the Northridge Quake to
make insurance available, the Earthquake Authority protects individual
condo units but not the building.

POIZNER The legislature has not given the CEA the authority to
offer earthquake insurance to master policies, and that's a big hole right
now.

ANA GARCIA: While politicians wrestle with fixing that loophole,
condo owners are left carrying a huge risk.

MURA-SMITH: If you are an insurance company and you've chosen to
make money in the state, and you're in that state through good times and
bad -- not when it's convenient for you to take the money and run. That's
not right.

ANA GARCIA: Which leaves them asking, what good is insurance on
their unit if the building around them falls down?

So what can you do to protect yourself? If you are considering
buying a condo, find out how much longer the earthquake policy on the
building is good for. If it expires soon you may be for a huge risk.

If you own a condo in a building that is about to lose insurance,
or can't get any, consider spending money to retrofit the building. It
might make the building more attractive to insurance companies or at the
very least might minimize your risk.

Some Helpful Web Sites For Condo Owners

EarthquakeAuthority.com -- There is a section for condo
owners to get limited coverage.

CaliforniaCondoGuru.com -- This Web site is a blog by an
expert who specialzes in condo issues. She has some helpful advice on
condo insurance.

Copyright 2007 by KNBC.com and KNBC (NBC4 Los Angeles). All rights
reserved. This material may not be published, broadcast, rewritten or
redistributed.

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