Duke Looks for Firm Ground

Gov. George Deukmejian deserves credit for his innovative plan for affordable and mandatory quake insurance. It could give California homeowners a major line of defense against earthquakes.

Considering the temblors that hit Northern and Southern California this week, there is no time like the present to regain momentum on the push for quake-protection measures.

The governor’s proposal would require 90% of state homeowners to buy policies covering $15,000 worth of damage to their homes and personal property. Coverage would also apply to renters who buy earthquake insurance to protect personal property. Deductibles would range from $1,000 to $2,500. The premiums--from $12 to $60 a year, depending on the type of structure and how close it is to an active fault--would be collected by insurers and pooled in a common trust fund that would pay off earthquake damage claims. After collecting perhaps $200 million in the first year, the fund would grow to billions if there were no losses in 10 years.

That is a big if , and one that troubles the insurance industry. How can the fund accumulate enough money to handle real catastrophes, industry spokesmen ask, if in the next few years many people make claims and deplete it quickly?

That’s one of the many questions to be answered during the legislative process. During hearings, both the Administration and legislators also ought to emphasize that the proposal is not meant to replace standard, comprehensive earthquake insurance. The governor’s approach, however, would help fill a gaping hole in current coverage: the 10% deductible. As it is now, typically 10% of the home’s value is deducted before standard quake polices take effect. The governor’s $15,000 coverage assumes a $150,000 home; residents of Los Angeles, Orange, San Diego and Bay Area counties would no doubt like to see the governor assume homes are worth more when the legislation is refined.

But these are details that can be worked out. The governor has provided the impetus for change. The Legislature must fill in the blanks.