THE LOS ANGELES EARTHQUAKE : Quake Insurance Won’t Help With Most Repairs Because of Deductible

Most homeowners will have to pay for the cracked walls, smashed crockery and other souvenirs of Thursday’s earthquake even if they have earthquake insurance.

The typical damage will not surpass 10% of the insured value of homes or personal property--the crucial figure in the earthquake insurance policies held by 15% to 20% of the area’s homeowners, according to a preliminary assessment of the situation by the insurance industry.

Typically, earthquake coverage is 10% deductible, which means it pays nothing on the first $10,000 of damage on a house insured for $100,000. Some policies are deductible up to 25%, however, while others carry a flat deductible amount of $2,500.

For apartment dwellers, similar coverage on contents can be bought on a renter’s policy.

That means earthquake coverage--which is not included in a standard homeowner policy--is for catastrophic situations.

“Earthquake insurance is designed to protect you and the equity in your home from a major financial disaster,” said Jennifer Nicholson of the Western Insurance Information Office, a Santa Ana consumer-education group supported by the insurance industry.

“It is not intended to protect you against the small things. As far as homeowners are concerned, not much of the loss will be insured.”

Before a 1985 California law required insurance companies to offer earthquake insurance with any new homeowner policies, only about 7% of those policies included earthquake coverage, Nicholson said.

But now, about 17% of all homeowner policies have the coverage, and the value of earthquake insurance carried by homeowners has increased 65%.

In certain cases, repairs that cost less than the deductible amount might still be covered by insurance.

A house fire caused by an earthquake is covered under regular fire insurance and homeowner policies, noted Rick Dinon, a vice president of 20th Century Insurance Co. in Woodland Hills.

Automobiles damaged by earthquake-related hazards like falling trees or flying objects are covered by the “comprehensive” option of standard auto policies, Dinon said.

Earthquake coverage for houses is not cheap. Dinon said it might range from $2 to $3 a year for each $1,000 of protection, or a cost of $200 to $300 for each $100,000 in insurance. And that is for single-family, framed stucco residences, which are deemed to be the best for withstanding quakes.

Wayne E. Hall, a Torrance insurance broker, said that for concrete or brick construction, earthquake coverage costs as much as $4 per $1,000 in coverage, meaning a homeowner seeking $200,000 coverage would have to pay $800 a year.

“We have got several calls from folks who all of a sudden are interested in buying earthquake insurance,” Hall said.

But homeowners hoping for coverage against aftershocks or new quakes in the next few days will find it difficult to get. Insurance companies usually place a moratorium on starting coverage for at least several days after a quake.