Accord Reached on Mandatory Earthquake Insurance : Legislation: Bill could provide more than $25,000 coverage for every California homeowner. For it, an annual fee averaging $36 would be collected.

Legislative negotiators and the Deukmejian Administration have agreed to a mandatory earthquake insurance bill that eventually could provide more than $25,000 in coverage for every homeowner in the state, lawmakers said Monday.

The measure would nearly double the $15,000 coverage proposed by Gov. George Deukmejian earlier this year.

“It looks like we have a deal,” said Sen. Frank Hill, a Whittier Republican who is carrying the governor’s measure.

The bill has been stripped of its references to “insurance” to avoid leaving the impression that the state is going into a business that until now has been reserved for private industry. Nevertheless, the program as it is envisioned probably will be regarded by the average person as earthquake insurance.

Although the program would apply to almost all homeowners, it is intended to cover the damages not covered by private earthquake insurance. These policies typically include a deductible clause that leaves homeowners responsible for damages equal to 10% of the value of their home.

The measure would require virtually every homeowner to pay an annual charge averaging $36, as Deukmejian proposed earlier this year. The money collected would go into a state-administered fund to be used only in the case of an earthquake.

But while the governor’s original bill would have capped quake damage payments at $15,000 for each homeowner, the newly drafted compromise allows that figure to rise to $27,000 after five years if the fund grows as fast as expected.

The fee is expected to generate $250 million a year. After three years, if the fund totaled at least $750 million, the coverage would be increased to $20,000 per home, with $1,000 of that going to pay for living expenses for people forced to leave their damaged homes. The rest would be used to repair property damage.

After five years, if the state fund topped $1.25 billion, another $5,000 would be added to the coverage payable for property damage. In addition, homeowners who suffered damage would be eligible for as much as $2,000 to strengthen their homes to withstand future earthquakes.

The legislation would permit the state to sell bonds and put the proceeds into the earthquake fund.

The changes are the result of several weeks of talks between Hill and Sen. Cecil N. Green (D-Norwalk), who had pushed a more ambitious plan. Green said the $15,000 coverage Deukmejian originally proposed would have been “too skimpy.”

Green said he wanted the state-mandated coverage to be generous enough to pay the 10% deductibles included in private policies. The benefits in the governor’s plan would have been equivalent to the deductible on a policy for a $150,000 home. Green said that was insufficient.

Robert Gore, Deukmejian’s press secretary, said the governor supports the changes. The new provisions are to be amended into bills introduced by Hill and Green and pending on the Assembly floor. Both measures are expected to pass, but not without complaints from some Assembly Democrats who wanted to do more.

Gore acknowledged that the proposal, the first of its kind in the nation, represents only a “first step.”

“This is an attempt to make sure homeowners in at-risk areas provide themselves with sufficient coverage,” Gore said.