State Quake Insurance Plan Repeal Urged : Disasters: Commissioner Garamendi calls for legislators to kill 6-week-old program, which he originally voted for as a senator.

Support for the state’s 6-week-old residential earthquake insurance program appeared to erode Tuesday, with Insurance Commissioner John Garamendi, the Assn. of California Insurance Cos. and the Consumers Union calling for legislative repeal.

Under the program, the first such system in the nation, homeowners are supposed to recover earthquake damages up to $15,000 after paying a $1,000 deductible on homes valued up to $200,000. The deductible grows to a maximum of $2,500 for more expensive homes, and the surcharge on homeowners policies to fund the system varies from $12 to $60 depending on relative quake danger.

As a state senator, Garamendi originally voted for the program, but even before he became commissioner he had second thoughts, concluding that it had insufficient financial underpinning. He secured a six-month delay from the Legislature and reluctantly began implementing the program Jan. 1.

Garamendi feared that a big earthquake early in the program would bring losses that would leave the fund insolvent, possibly making state taxpayers liable for the underfunded claims. Studies of earthquake losses also suggested that future claims could be double the receipts.

After exploring the idea of a big increase in the surcharge, Garamendi appeared Tuesday at a Sacramento news conference to support legislation by a bipartisan coalition of legislators to end the program and refund surcharges already collected from homeowners. Passage of urgency legislation to go into effect immediately requires a two-thirds vote in each house and the governor’s signature.

Meanwhile, Gov. Pete Wilson seemed to back away from earlier support for the plan. On Dec. 4, Wilson chided Garamendi for his reservations, writing that they were ruining public support and advising him to undertake a public relations campaign to undo the damage he was causing.

But on Tuesday, Wilson’s insurance adviser, Marjorie Berte, said the governor is “neither in support or opposition” of repeal of the program.

“If there’s no public confidence in the program, the repeal effort may succeed,” she said.

Originally, the state program was designed to fill the coverage gap caused by the private insurers’ unwillingness to sell an earthquake policy with less than a 10% deductible. This meant the first $15,000 or more of damage was left uncovered, and that was what the state planned to cover.