However, a $1 million insurance policy does not cover a multimillion-dollar judgment that threatens the loss of residents' utilities and homes, a company executive announced Thursday.

A Ventura County Superior Court judge will decide this year whether Farmers must settle part of a $7 million breach of contract and defamation judgment affecting 264 homeowners.

"We have five people who own (Le Parc) units," said Jerry Carnahan, state executive director for the Farmers Insurance Group, based in Simi Valley. "We fully empathize with their position. We feel terrible.

"It's an absolute right for them to march. Do I like it? No, because the average public doesn't understand the litigation issues."

Le Parc residents have vowed to march 1,000-strong at 9 a.m. Saturday from City Hall to the Farmers regional office on Cochran Street.

Residents and homeowners association officials, saddled with a debt estimated with interest to be $21 million to ZM Corp., say it's time the insurance giant settles up.

A court-appointed receiver has not paid $50,000 in utility bills at the complex and services are scheduled to be cut off Saturday.

"The homeowners association was disappointed the insurance carrier has chosen to fight rather than settle," said Jim Lingl, attorney for the Le Parc Homeowners Association. "We obviously believe the claim is covered and should have been paid a long time ago."

Lingl said an early offer by the ZM Corp. for a $1 million settlement was denied by the homeowners association and possibly the Farmers Insurance Group.

Farmers officials said the company has so far defended Le Parc interests in three suits. But the general liability policy for the Le Parc homeowners association did not cover breach of contract or defamation, the bases for an arbitrator's judgment last year in favor of ZM Corp. relating to construction work done in 1994, Carnahan said.

Farmers paid out $2 billion in claims related to the Northridge earthquake and now covers the assessments of 38 individual Le Parc homeowners, he said. But Farmers was not about to set a precedent by paying for claims it didn't owe.

Better to leave it up to a judge to decide, the company concluded.

"We are in the business of paying claims we owe -- no more, no less -- because your policyholders have a duty to expect you to," Carnahan said. "If the court tells us we owe it, we'll pay it like that -- a million dollars."