NORTHRIDGE EARTHQUAKE

The Quake that Shook Allstate: Sherman v. Allstate

AT 4:30 AM ON January 17, 1994, a 6.7-magnitude earthquake rocked Southern California, collapsing buildings, severing freeway interchanges and rupturing gas lines. Fifty-seven people died, more than 9,000 were injured and more than 20,000 were displaced from their homes. The earthquake, named for its epicenter in the town of Northridge, proved to be the costliest in US history, causing estimated losses of $20 billion.

Many of those who suffered losses turned to the law firm of Shernoff Bidart Echeverria LLP when their claims were not handled fairly.

Shernoff Bidart Echeverria filed a class-action lawsuit against Allstate Insurance Company alleging that the company was involved in a widespread scheme, in which adjusters had altered engineering reports and construction estimates, to minimize claimants’ damages.

The case settled upon an agreement by Allstate to provide an independent re-evaluation of engineering reports and construction estimates and to notify an additional 12,000 policyholders of their potential claims.

In the end, Allstate re-evaluated the claims of over 2,300 policyholders and made fair and total payment to them.

In the case, lead counsel William Shernoff and Michael Bidart were able to effect a monumental settlement that also served as a warning to the entire insurance industry about the perils of mistreating policyholders in their time of need.