Quackenbush Rejects Idea of Landslide Insurance Program

California Insurance Commissioner Chuck Quackenbush on Tuesday rejected the idea of the state sponsoring a landslide insurance program for hillside homeowners, saying it would be too costly and benefit too few people.

In separate developments Tuesday, however, a California lawmaker offered El Nino victims hope for a break on state income taxes, and the White House announced that the Clinton administration will request an additional $177.3 million in disaster aid for California.

“A landslide authority would not be a viable option for two reasons,” said Dana Spurrier, deputy commissioner and press secretary to Quackenbush. “First, it would be too expensive for homeowners to purchase coverage, and second, only a small percentage of California homeowners would be interested in buying it.”

There is almost no landslide or mudslide insurance available now from private insurance companies. After homes statewide were devastated by mudslides following El Nino-fueled storms in February, Quackenbush announced he would consider the viability of a state-sponsored insurance program, similar to the California Earthquake Authority.

But he has concluded that the two potential disasters differ, Spurrier said.

“The reason why the California Earthquake Authority is so vital to this state is because earthquake risk prevails statewide, affecting hundreds of thousands of people,” she said.

“Earthquake insurance is affordable because the risk is spread among low-, moderate- and high-risk areas. Landslide coverage would only be purchased by people who were at high risk,” she said, leaving too few policyholders to provide the premium income to cover disaster reimbursements.

The announcement is yet another blow to hillside homeowners trying to recover or protect their property from the recent rains that saturated soil, lubricated bedrock and sent structures sliding down slopes.

In Washington, White House officials said the proposed additional $177.3 million, which is subject to approval by Congress, would be added to at least $40 million in aid previously announced by the administration to help California recover from a series of punishing storms.

The money would be divided among several federal agencies:

* $126 million to the Department of Transportation for emergency highway repairs.

* $25 million to the U.S. Army Corps of Engineers for debris removal.

* $19.7 million to the Department of Interior for trail restoration and debris removal.

* $6.6 million to the Department of Agriculture to aid dairy and livestock farmers and pay for storm cleanup efforts and other expenses.

President Clinton last week announced a package of grants to help people who have lost jobs because of the storms and to repair roads.

Meanwhile, state Assemblyman Wally Knox (D-Los Angeles) announced Tuesday that he intends to introduce legislation to provide tax relief to mudslide victims.

Knox, chairman of the Assembly Revenue and Taxation Committee, unveiled the proposal at a home in the 3800 block of Eureka Drive in Studio City. The home collapsed in a mudslide Saturday night.

Assembly Speaker Antonio Villaraigosa (D-Los Angeles) has sent a letter to Gov. Pete Wilson requesting a special session of the Legislature to speed the process of getting disaster aid to victims, Knox said.

The proposed legislation--patterned after a prior measure for flood victims--would enable victims of mudslides and floods to deduct 90% of the amount of the uninsured loss from their income for state tax purposes, spread over tax returns for up to five years. If all the deduction had not been used after five years, 50% of the loss could be deducted for an additional five years.

Under current tax law, Knox said, taxpayers are limited to a 50% income deduction in the current tax year. If the deduction is bigger than the taxpayer’s income, the overage is lost.

Insurance companies statewide stopped offering landslide coverage following the Portuguese Bend landslide on the Palos Verdes Peninsula in the 1950s.

Lloyds of London on Jan. 1, however, began offering landslide insurance at a rate of about $1,200 a year for $300,000 in coverage, a spokeswoman for the insurance industry said.

State officials said the company has yet to sell a single policy, but suggested consumers interested in purchasing landslide coverage contact their agent for more information.

In the battle to rebuild, homeowners can look to government and nonprofit agencies for assistance.

President Clinton’s major disaster declaration for California on Feb. 9 released funds for temporary housing, low-interest home and business loans, individual and family grants and disaster unemployment assistance, among other programs, said Greg Renick, a public information officer with the governor’s Office of Emergency Services.

Western Insurance Information Service of Los Angeles and Community Assisting Recovery Inc. of Canoga Park are two nonprofit agencies advising homeowners on filing insurance claims and hiring contractors.

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Times Staff Writer Martha Willman contributed to this story.