Senate Approves Plan Requiring Homeowners to Buy Quake Insurance : Disasters: The measure was proposed by Deukmejian after last year’s Bay Area quake. It now goes to the Assembly.

SACRAMENTO — Gov. George Deukmejian’s proposal to require nearly every California homeowner to buy a bare-bones earthquake insurance policy was approved in the Senate on Friday and sent to the Assembly.

The plan, introduced in response to last fall’s Bay Area earthquake, would create a state-mandated policy designed to provide the kind of low-dollar coverage not normally insured by private carriers.

It would require insurance companies to collect a $12 to $60 annual surcharge on every homeowner’s insurance policy sold in the state, with the premium depending on each homeowner’s level of earthquake risk and the age of the home.

The money would be turned over to a special state fund and used only for paying expenses after an earthquake, when each homeowner would be entitled to up to $15,000 in coverage after a $1,000 to $2,500 deductible. The deductible would be on a sliding scale and tied to the value of the home.

Republican Sen. Frank Hill of Whittier, who is carrying the governor’s proposal, said he normally would oppose any plan to require people to buy something they might not want. But he said the 1987 Whittier quake and the 1989 Bay Area temblor showed that the state has to be better prepared to absorb the cost of a disaster.

“I’m convinced we need to start dealing with earthquakes prospectively, not calling a special session (of the Legislature) every time one occurs,” Hill said.

Hill said that in the Bay Area earthquake, only 1,000 homes sustained damage bad enough to exceed the deductible on an earthquake insurance policy, which typically is 10% of the value of the home, or $20,000 on a house worth $200,000. He said the damage suffered by the other 24,000 homes affected by the quake averaged $8,000.

In other words, Hill said, private earthquake insurance rarely covers the low-level damage that most homeowners are likely to suffer in even a major earthquake.

“What this program does is get money quickly into the hands of the people who need it,” he said. “We can do that with minimal paper work and no new state bureaucracy.”

Since it was unveiled by Deukmejian earlier this year, the plan has changed significantly.

Deukmejian proposed requiring the coverage in only 40 of the state’s 58 counties. But in its current form the bill mandates the insurance policy statewide.

The governor also suggested paying for damage to personal property, such as the contents of homes. Now, the bill would cover only structural damage.

Hill said both changes, which Deukmejian now supports, were necessary to make the program financially feasible and easier to manage.

But Democratic Sen. Leroy Greene, whose Sacramento-area constituents would be forced to pay for insurance they almost certainly would never need, objected to the statewide nature of the plan. He said it would be only fair to create a similar plan to share the burden of flood insurance, which is costing Sacramento residents several hundred dollars a year but is unnecessary in most parts of the state.

“It’s just as reasonable to do that,” Greene said.

The bill passed on a bipartisan 23-10 vote and is expected to fare well in the Assembly.