Common Sense on Disasters : Company's troubles underscore the need for new approach to insurance

Auto insurance used to be the sexy insurance topic (if that phrase isn't an oxymoron) in California. Complaining about the thousands of dollars you shell out each year for two cars and a teen-age driver could always attract empathetic nods. Homeowners insurance, including earthquake coverage, was just there, the reliable old brown shoes of the insurance game. Until Jan. 17.

Then everyone dragged out their policy; the minority who actually had earthquake insurance found some comfort, though the 10%-of-value deductible was a five-figure hurdle. A state-run program that might have covered some of the losses was canceled last year for fear of insolvency.

Assemblyman Rusty Areias (D-San Jose) is sponsoring a commendable but far more modest statewide earthquake repair fund; of course that's no immediate help to customers of 20th Century Insurance Group, which has asked permission to triple its rates for quake coverage. The math of 20th Century is hard to fault: Its earthquake coverage is concentrated in the San Fernando Valley and the company is facing quake claims approaching $600 million. If the state insurance commission grants the request, other companies surely will follow suit and fewer people will be covered in the end.

So--we've said it before--the only thing that makes sense in the long run is a national disaster coverage scheme, covering not just quakes but tornadoes, hurricanes, volcanic eruptions--getting insurers to cover all in standard homeowner policies. Rep. Norman Y. Mineta (D-San Jose) and Sen. Daniel K. Inouye (D-Hawaii) are sponsors of just such a proposal, now before the House water resources and environment subcommittee.

Consumers would benefit from the vast increase in risk-sharing and no insurance company would again find itself in the position of 20th Century. Perhaps the capable head of the Federal Emergency Management Agency, James Lee Witt, could help persuade Congress to pass the bill. Witt, who would like some revisions, could see to the fine-tuning while he jawboned this bill into reality before the next (check one) (hurricane) (earthquake) (volcanic eruption) hits.

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