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Earthquake Insurance Law Upheld

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A federal appeals court is upholding a California law that allowed homeowners to renew insurance claims involving the 1994 Northridge earthquake.

The insurance industry had challenged the law that allowed Northridge earthquake victims the opportunity to refile claims. California lawmakers approved the time extension, which ran through 2001, because of disclosures that some people were being ripped off by insurers. Before the law was changed, homeowners had a year to file a claim after the quake.

Insurance companies claimed it was unconstitutional to retroactively void contracts. But the Ninth U.S. Circuit Court of Appeals said today that the law was constitutional because of the perception of wrongdoing by insurers.