TWIN TEMBLORS: THE LANDERS AND BIG BEAR QUAKES : State’s Quake Insurance Plan Will Pay Homeowners’ Claims

The state’s earthquake recovery program, barely 6 months old and on the verge of being eliminated, will cover losses suffered Sunday by homeowners in the two Southland quakes, according to the Department of Insurance.

The program pays for up to $15,000 in damage to residential property, less a deductible of $1,000 to $3,500, depending on the value of the home.

Homeowners--including owners of mobile homes--may file a claim if they have paid the $12 to $60 annual surcharge on their hazard insurance bill or have not yet been billed this year by their insurance company, said Kenneth Burt, spokesman for Insurance Commissioner John Garamendi.

Homeowners who received a bill but refused to pay the surcharge are not eligible to be reimbursed, Burt said. Renters are not covered by the program, which also does not cover damage to homeowners’ personal property.

Burt said homeowners may file claims beginning at 1 p.m. today by calling (800) 640-8337. Homeowners who do not wish to file a claim but have questions about the program can call the department’s regular consumer hot line at (800) 927-HELP.

The program, begun after the 1989 Bay Area quake, was intended to pay for the kind of minor structural damage that normally would not be covered by private earthquake insurance, which typically includes a deductible of about 10% of the value of the home.

But Garamendi has asked the Legislature to eliminate the program because he said he expects the annual losses from earthquakes to exceed the amount of money generated by the surcharge.

In a major quake, the fund would be far short of what it needs to reimburse all those whose homes would suffer damage, Garamendi said. In that case, the program, which took effect Jan. 1, calls for the payments to be prorated based on how much is in the fund.

The earthquake recovery fund has collected about $30 million this year, Burt said. About $12 million in claims are expected from quakes earlier this year in Palm Desert and on the Northern California coast. Those claims averaged about $6,000 each. At that rate, the fund has enough in reserve to pay another 3,000 claims.

“We’re just fortunate these earthquakes did not occur in downtown Los Angeles,” Burt said Sunday.

Legislation to immediately repeal the program failed to get the two-thirds vote needed for passage in the Senate last week. The bill was amended to take effect Jan. 1, lowering the total vote needed to a simple majority. It passed and was moved to the Assembly, which could take it up as soon as today.

The program’s supporters argue that it can work and should be kept on the books. They say the state’s finances will be vulnerable in a catastrophic quake regardless of whether the earthquake program exists. After the big Bay Area quake in 1989, the state enacted a quarter-cent sales tax increase for 13 months to raise about $800 million for earthquake repairs.

Some lawmakers have suggested converting the quake program into a general disaster assistance fund that would not guarantee specific benefits but would be available to help victims of earthquakes, fires, floods or other natural disasters.