In its efforts to recover from the 1906 earthquake, Santa Rosa faced the same main obstacle as San Francisco: Getting the Insurance companies to pay up.

Compared to the great city, losses here were chump change. The full value of the damage in San Francisco was estimated at around $500 million, maybe as much as a billion dollars – and even that lower figure was more than the entire federal budget for that year. But the insurers only paid out about $180 million; some residents were underinsured or didn’t have insurance at all, and the companies also pulled every trick possible to avoid paying. (Multiply these dollar figures by about 20x to estimate current value.)

Santa Rosa reported to the governor that damages totaled about $3 million, and at the June 27 meeting of the insurance companies, the insurance men pegged the town’s losses at no more than a relatively puny $400,000. But that didn’t mean that the insurance companies were any more willing to open their purses; if anything, the situation was worse in Santa Rosa for want of attention paid to the distant town. Few claims were settled in the two months following the quake when, after pleas to the state commissioner, insurance companies held a meeting specifically regarding losses here. The first proposal made was that they should form a committee to visit Santa Rosa and report back three weeks later – which would have pushed any possible settlements beyond 90 days from the earthquake.

There was nothing subtle in their tactics; the insurance companies wanted to stall indefinitely, playing a cruel game of nerves with people who were often desperate. When payments were offered on claims, most policy holders were pressured into taking cash offers that amounted pennies on the dollar, with the implied threat that the company just might decide to demand proof positive that the damage was 100% fire related.

Almost all policyholders had a “fallen-building” clause in their insurance policies: If the building fell down and a fire swept over the wreckage and burned everything, tough luck. If the contents of the building were on fire before the collapse, however, the insurance company had to pay something. Determining the precise sequence of these events was no easy thing, of course, particularly in Santa Rosa where the first fires were noted within seconds of the tremors. Hairs split further over situations such as: a) fire starts, b) structure collapses, resulting in c) inability of fire dept. to extinguish fires.

Some cases actually did drag on for years, with the last settled by the California Supreme Court in 1911 (the insurance company lost). The only happy news to come from all this litigation is that it preserved for historians the testimony by Fire Chief Frank Muther and others, which are the most accurate and detailed accounts from that day.

Both Santa Rosa papers followed developments avidly, and whenever someone received a check it was treated like a lottery win: “J. G. Wieland, the Fourth street baker, whose place was destroyed by fire on April 18, has received his insurance in full from the Delaware Insurance company,” reported the Press Democrat, June 23. Local resident J. L. Byers was cheered by the papers where he interceded on behalf of his daughter, who lived in San Francisco and had accepted a 75% settlement; he confronted the company rep and insisted that their payment was tantamount to admitting the full amount was actually due, and threatened suit. The agent supposedly wrote a check for the balance on the spot.

In the end, fewer than ten companies paid their losses in full, most prominent being Aetna and Lloyd’s of London. Like many insurers, Fireman’s Fund didn’t have enough in the bank to pay everyone’s losses, but they still made good; they paid 50 percent on all claims, declared bankruptcy, reformed the company, and paid the balance owed in new company stock. It was a remarkably fair and honorable resolution, particularly considering more than a dozen companies declared bankruptcy and never paid a cent.

(RIGHT: Ad from the July 23, 1906 Santa Rosa Republican)


The eyes of the entire commercial world are focused on the insurance companies just now. If they waive technicalities and pay up promptly, people may say they are all right and entitled to confidence and support. If, on the other hand, they interpose uncertain phrases and ambiguous clauses in the attempt to avoid carrying out their obligations, the public will be done with them. No one man in a hundred reads a fire insurance policy. He accepts it from the agent for what it purports to be on its face–a contract to protect the insured against loss by fire. The cause or origin of the fire cuts no figure with the insured. What he wants is protection, that is what the agent tells him he is buying, he pays his good money for it, and now it remains to be seen whether or not that is what he gets.

– Democrat-Republican, April 24, 1906
Insurance Matters

W. S. Davis and C. D. Barnett, insurance agents, visited the board of managers in Oakland on Tuesday. Mr. Davis says people must be patient. He is confident everything will be all right.

– Democrat-Republican, April 25, 1906

More Insurance Checks

Eardley & Barnett have received checks in payment of fire losses on April 18 from the Phoenix Assurance Association of London as follows: Rasin Trembley, $49.25; N.R. Davidson, $400…the check sent Rasin Trembley is the third he has received on account of damage done by the fire on April 18.

Santa Rosan Turned Down

Mrs. W. R. Parker of his city, who conducted the Pricess lodging house here up to April 18, was turned down in a cool manner in San Francisco recently. She went to call on Secretary Wait Blixon, of the National, regarding her loss by fire, and was curtly informed not to delude herself with the belief that she would be reimbursed. Blixon said his company would refuse to recognize claims from Santa Rosa, although no representative of the company had been here to view the situation. Mrs. Parker says some San Franciscans are settling on terms of forty cents on the dollar with Blixon’s company, the doughty secretary forcing these terms of policy holders.

– Santa Rosa Republican, June 11, 1906

As a result of the many complaints that have reached this office concerning the treatment being accorded local policy holders, the Press Democrat yesterday wired both Insurance Commissioner Wolfe and Deputy Attorney General George A. Sturtevant of San Francisco apprising them of the conditions here and asking them of the conditions here and asking them to see that those companies apparently disposed to do otherwise be made to accord their customers fair treatment.

While some very questionable tactics have been employed, it would be anything but fair to place all the companies doing business here in the same class. It is true that very few claims have as yet been paid, but several of the leading concerns have sent representatives here to talk over the situation with their policyholders and try to arrange a satisfactory and equitable basis of settlement. Some of the Company Managers have even visited this city personally for the same purpose, and little apprehension is felt regarding the outcome of cases such as these. Other cases can be mentioned, however, that present a very different aspect.

The American Insurance Company of Philadelphia, for instance, has repudiated all its losses here, although when asked in his own office by an indignant policyholder whether the company had ever sent any of its men up to Santa Rosa to investigate and report upon conditions here, Walt Blixon, the American’s secretary and chief adjuster, was compelled to admit that it had not. “How can you claim to know anything about the situation there one way or the other, then?” he asked. “Well, we have some photographs that show how the town looks,” was Blixon’s reply. And this was all the satisfaction that the policyholder was able to get. The policyholder referred to is Mrs. W. R. Parker of this city. The following paragraph republished from an item that appeared in the Press Democrat a few days after Mrs. Parker’s return home here becomes of interest:

“Mrs. Parker gives an interesting description of her visit to the company’s office and the scenes she witnessed there. A room full of people were waiting to get a chance to see Mr. Blixon, but only one was admitted at a time. One man came in accompanied by a friend, and when his turn arrived wished to take his friend in with him, but was not allowed to do so. Another man on coming out of Blixon’s office was asked what he had accomplished. ‘I had to settle for forty cents on the dollar,’ he replied. An irate individual stalked out and refused to answer any questions. ‘He’ll come back and take our terms,’ laughed the office boy, a bright youngster of about twelve years old. ‘They all come back,’ he added, by way of explanation.”

The Phoenix of Hartford is another company that has denied its liabilities here, and numerous proofs of loss sent to the company’s Oakland office have been returned by registered mail, accompanied by a polite note to the effect that the Company “was in receipt of what purported to be proofs of loss,” but “begged to return the papers referred to,” etc., and “refused to consider the claim in any way whatever.” Some of the local policyholders in the Phoenix are known to have valid claims, and it is thought that the company’s unexpected stand has been taken through a misapprehension upon the part of its managers as to the true facts. The Connecticut has also denied its liabilities in a number of cases here, but has paid one claim which it at first refused to recognize. Other instances of peculiar work upon the part of two or three other companies might also be mentioned, but it is perhaps not necessary at this time.

In marked contrast to the course followed by the companies above mentioned is that of the Aetna, which has settled several losses without question, paying dollar for dollar. Temple Smith, the stationer, received a check from the Aetna for $500 on his stock of goods contained in the two-story brick building near the corner of Fourth and B streets. Mrs. M. J. Lowrey, who carried a policy on her household goods for a like amount i n the same company, was also promptly paid. She resided in the Kinslow building, a brick structure on Fourth street. The Aetna also paid the claim of M. S. Davis for $1,750 on the brick building on Fourth street formerly occupied by H. H. Moke as an undertaking parlor. Mention might likewise be made of two claims paid only a few days ago by the Phoenix of London and the Fire Association of Philadelphia. The former paid a $500 loss on the Temple Smith stock, and the latter forwarded a check for $1,000 to the same party without question upon receipt of proof of loss. The Queen paid the claim of the Elks and several other companies have indicated their intention to pay, so the action of the companies mentioned leaves those concerns that have flatly denied all liability here in a very peculiar position, to say the least.


W. S. Davis & Co., the company’s local representatives, are in receipt of a letter from the San Francisco office of the Northwestern National stating that every possible effort has been made to advance settlements of the company’s losses in San Francisco, and that over half of its claims there have already been adjusted and paid, while the matter of settling the company’s losses in Santa Rosa will be taken up in a few days. Accompanying the letter was a draft in payment of the claim of Mrs. Lilia Ware for damage done her building at the corner of Fourth and Davis street.

– Press Democrat, June 23, 1906

A few of the “welching” insurance concerns are trying to escape responsibility here by claiming that they are exempted under their contracts by the falling wall clause, which reads as follows:

“If a building, or any part thereof fall, except as the result of fire, all insurance by this policy on such building or its contents shall immediately cease.”

It will not be denied that certain buildings here were destroyed or ruined by the earthquake. Their number is far less, however, than the insurance men of the type above mentioned would make it appear. But are there any buildings here that really fell, within the true meaning of that word?

To say that a man fell out of a window when in reality he was thrown out by another man during the progress of a fight, or blown out by an explosion, would clearly be a misstatement of fact. The motive for making such a statement under those circumstances might be open to question, but the natural inference would be that somebody was trying to create a wrong impression. What is the natural inference, then, when an insurance man says a building “fell,” when it was really thrown down by an earthquake?

In the event of having to try to sustain their position before the courts, the companies contending that a building thrown down by an earthquake was not really thrown down at all but simply fell, would doubtless argue that the matter of earthquakes was in contemplation when the clause above referred to was inserted in their policies. The fact is, however, that inherent weaknesses and faults of construction were really what the companies employing that clause were trying to guard against. The companies that were figuring on earthquakes said so, for what is known as the “earthquake clause” appears in place of the “falling wall clause” in the policies issues by many of the concerns engaged in the insurance business at the present time, and has for many years.

– Press Democrat, July 6, 1906

Photo courtesy Larry Lapeere

Leave a Reply

Your email address will not be published. Required fields are marked *