Kobe Victims Face Financial Crunch : Japan: Insurance will cover little of the cost of rebuilding after quake. Some fear major losses.

By LESLIE HELM

Jan. 28, 1995 12 AM PT

TIMES STAFF WRITER

KOBE, Japan — Sandwiched between a major downtown artery and a neighborhood of crushed houses is a playground the size of a large traffic island, where six tents stand.

Rie Hatada sits on an upturned plastic box, quietly tending a small fire. Curled up close by is her 6-month-old puppy, Buuta. Her two boys, 6-year-old Kennichi and 12-year-old Sho, kick around a soccer ball nearby.

Hatada doesn’t complain about her temporary home. The tent is dry, if cold, and she has daily rations of rice and canned meat. But she is beginning to think of the future--and getting worried.

“Things aren’t so bad now,” Hatada says. “But the stores are beginning to open again. What happens when they stop giving out free food? What happens when we have to leave this place?”

A week and a half after this city’s devastating earthquake, many of the hundreds of thousands of homeless are looking uncertainly to the day when they are forced from the shelters to make it on their own.

The fears sometimes turn tragic. Police reported two quake-related suicides and three suicide attempts this week. In both suicides, the victims hanged themselves in the debris of their homes.

For those trying to reconstruct their lives and homes, the financial realities, in particular, are grim.

Last week, the government said it would pay families $50,000 for the loss of a household head and $25,000 for the death of a spouse who is not a head of household. People not covered by such payments have largely only their savings and their pensions to rebuild with and live on.

Jintaro Yamamoto, a retiree living in one of the many crowded relief centers scattered throughout the city, says his modest pension will force him to move to the less expensive countryside.

The city of Kobe does have some disaster relief programs for survivors, but these are not generous. One program promises $400 to families who have lost their homes.

A national government policy includes provisions for low-interest loans of up to $35,000 for lost homes, but these loans require certification at city level and take time to implement.

“We have to certify that the house has been destroyed,” says Fumiya Ishii, a city official. Even if a house is declared unlivable, that doesn’t necessarily mean it has been destroyed, he explains. “It’s a very difficult determination.”

And by now, just about all of those who have lost a home know they will get little help from their homeowner’s insurance policies. Those policies pay only 5% of the insured value of a house, up to a maximum of $30,000, in cases of earthquake damage, unless the homeowner has been paying costly premiums for separate earthquake insurance. Press reports estimate that only about 3% of people who lost their homes were covered by a separate quake policy.

As he picks through the wreckage of his home, Tatsuo Sasada, a retired seaman, wonders aloud if he can ever afford to build a new one. He figures it will cost him $300,000 to clear the rubble and build a modest house on his small plot. His house is insured for $150,000. That means he can expect to receive, at most, $7,500 in insurance.

Tsutone Kano, a 59-year-old employee at a chemical company, says he won’t be able to replace his 700-square-foot home for less than $200,000. But he knows the banks won’t let him borrow because he will soon turn 60 and be forced into retirement. His son says the government should change the law to force companies to allow employees to stay on until 65, so they can rebuild their savings before retiring.

Kano isn’t sure if his company, with its production facilities disabled, will keep paying the salaries of employees who have nothing to do. “Maybe they will pay 50%, but they won’t do that forever,” he said.

The government has eased requirements for unemployment insurance so that those who lose jobs because of the earthquake will be eligible. But those procedures will be strictly monitored, and the amounts distributed will be modest.

Younger couples have the added burden of having to pay off the loans on their destroyed houses before borrowing money to rebuild.

Homeowners, at least, still have valuable treasure under the broken roof tiles and splintered wood--their land. Even with the city in ruins, land in most areas is estimated to be worth $3,300 or more per square foot, which could help those willing to sell if they can relocate to where the proceeds will stretch further than in Kobe.

Real estate agents in Mercedes-Benzes have already been seen scouting burned-out neighborhoods for land to buy. Minoru Tada, general manager of the Osaka equity department at Nomura Securities, says many wealthy investors are selling stocks to build up cash so they can go to Kobe with suitcases full and persuade homeowners to sell.

Conditions are tougher for renters who have not only lost all they own, but may also have lost low-rent housing they are unlikely to ever find again.

The government has promised to build 10,000 apartments within a month. But there are nearly 300,000 homeless here, and the new apartments will be temporary. New developments by the private sector could take years to build as land rights are sorted out and companies are forced to follow stricter building codes that make construction more expensive. Apartments in new buildings in major cities typically rent for a minimum of $1,500.

On Friday, 37,000 quake survivors stood in orderly lines to turn in applications for just 2,700 units of temporary government housing.

Hatada doesn’t like to think about what to do next. She can’t afford to pay any more than the $600 a month she paid for the small space above a little store that collapsed during the earthquake.

Her husband, a construction worker, is earning $100 a day helping to clear rubble from the streets, but that’s not enough to buy food and replace clothes and household goods lost in the earthquake.

“We’re waiting for the government to do something,” she says, echoing the sentiment of thousands of others. “We need a place to live.”