Insurance Crunch Has Homeowners Seeking Relief : Finance: For policyholder who has been canceled and is finding new coverage costly, state plan may be too little, too late.

In the 10 years he insured his home with Michigan Millers Mutual Insurance Co., Norman Press never filed a claim--not when he lived in Tarzana, not after he moved to Woodland Hills, not after fire, flood or earthquake.

But last month, the company notified Press that his homeowners insurance would not be renewed in August, putting the 61-year-old optician in a double bind: Michigan Millers refuses to extend his old policy and the other companies refuse to write him a new one.

“I called every major carrier,” Press said. “I get the same story from all of them: They’re not issuing policies for that ZIP code.”

The carriers said there was too little insurance revenue coming in from that area to pay for a natural disaster.

Press’ dilemma is not unique. Staggered by huge payouts after the Northridge earthquake, major insurance carriers have curtailed or sharply cut back renewal of homeowners policies and issuance of new ones. A Times Poll earlier this month found that 11% of homeowners in the San Fernando and Santa Clarita valleys who had earthquake insurance were dropped by their carriers after the Northridge quake.

So it was with interest Friday that Press read reports of a novel insurance plan proposed by state Insurance Commissioner Chuck Quackenbush. Using money from insurance companies and private investors, a state-run pool would offer bare-bones earthquake coverage to all homeowners. That would then free up the market for regular homeowners insurance, which several companies stopped selling because of a state requirement that they offer new policyholders the option of buying earthquake coverage too.

Quackenbush’s plan is the first of its kind in the country. But for Press, it seems a classic case of too little, too late.

“It doesn’t give us an adequate area of coverage,” he said. “And it won’t be there for quite a while. Our Legislature does not move too quickly.”

The plan would make available residential earthquake policies capped at $400,000 in structural coverage, with a 15% deductible--high by industry standards. Claims for household contents would be limited to $5,000.

By contrast, Press’ agreement with Michigan Millers gave him an assurance of $500,000 for structural damage, with a 5% deductible, and more than $200,000 in coverage for contents.

After calling smaller carriers still willing to write new policies, Press eventually found comparable coverage--but not a comparable price. The best quotation included a $4,300 annual premium--$125 a month more than what he previously paid.

Either he swallows the difference or settles for a less-comprehensive policy, an option Press will not consider for the 4,000-square-foot home he built for himself and his wife seven years ago.

“The problem is, if the house burns to the ground, what do I do?” he said. “I’m putting my house in jeopardy.”

What maddened Press even further during his search for a new insurer was his discovery that Michigan Millers not only renewed another resident’s policy in Northridge--closer to the quake’s epicenter--but also lowered the premium.

“They’re red-lining our ZIP code,” Press said.

A spokesman for Michigan Millers acknowledged that none of the 19 policyholders in Press’ 91367 ZIP code were allowed to renew their homeowners policies. The Lansing, Mich.-based company, which paid out $14 million to cover quake losses, has also stopped writing any new homeowners policies anywhere in California.

“This is not very fair,” Press said.

He said he will probably pay the $4,300 annual premium. “I don’t think I have a choice.”