More than 40 insurers, including Allstate Insurance and Farmers Insurance, were sued in California for allegedly failing to inform policyholders that they have a 12-month extension to file home insurance claims stemming from the 1994 Northridge earthquake.

Community Assisting Recovery, known as CARe, filed the lawsuit on Aug. 31, 2001, in Superior Court in Los Angeles. CARe is a nonprofit organization that provides assistance to disaster victims. The lawsuit was dropped less than a month later.

The insurers made little effort to publicize a state law that took effect Jan. 1, 2001, that gives many Northridge residents dissatisfied with their settlements until the end of 2001 to resubmit their damage claims or sue their insurers, according to George Kehrer, the group's executive director. Passage of the law came in the wake of the resignation of former California Insurance Commissioner Chuck Quackenbush, whose department allowed insurers to allegedly mishandle thousands of Northridge claims.

Less than 1 percent of claims stemming from the Northridge quake remain unsettled, according to Candysse Miller, the executive director of the Insurance Information Network of California. She says the insurers that her trade group represents have made good faith efforts to make sure policyholders know the extension is available.

"Yes, 99 percent of the claims may have been settled, but on the insurers' terms," says Kehrer. He has personally inspected the homes of nearly 100 policyholders who have settled with their insurers and "90 to 95 percent of those homes had additional damage [that insurers didn't pay for], ranging anywhere from a couple of hundred dollars up to thousands of dollars."

Brian Kabatek, an attorney for CARe, said the organization dropped the suit because it is "satisfied the insurance companies are going to do the right thing." The companies have assured CARe that they will fairly inform people of claim deadlines.