A homeowners earthquake insurance deductible "gap filler" has been proposed by California Gov. George Deukmejian.
Gov. Deukmejian's plan would attempt to bridge the deductible gap by providing a basic $15,000 earthquake coverage, funded by policyholder surcharges, which would help pay all or part of earthquake policy deductibles for those with extensive losses.The governor's proposal came Thusday with the shake, rattle and roll accompaniment of close to 100 earthquake aftershocks striking Watsonville, Upland and Indio, all three being communities that were struck last year by earthquakes.
Gov. Deukmejian's proposal followed the grim reminder in San Francisco that the state's wide swarm of earthquakes, ranging from 3.2 to 5.4 on the Richter Scale, were occurring when San Francisco, which always loves a party, was commemorating the 1906 tumbler that has gone down in the record books as the largest quake to strike California this century.
There was some additional destruction to property that had been damaged during the San Francisco Bay area earthquake while Upland and Indio - next door to the posh resort in Palm Springs - had many residents who suffered mild emotional trauma.
The governor's plan would be funded by a homeowner policy surcharge of between $12 to $60 a year, depending on the value and location of the home. The average cost to homeowners would be about $36 a year. It would be required in high earthquake prone areas of the state with optional coverage available elsewhere in the state.
Funds would be placed in a special Homeowners' Earthquake In surance Fund that would be administered by the state. In the event of a quake the homeowner's regular insurance company would be responsible for adjusting any resulting claims.
"An estimated $220 million will be raised in the first year of the program and will be invested, with premiums and proceeds from investments used solely for paying earthquake insurance benefits and running the program," said Gov. Deukmejian.
"If there are no major short-term losses, the fund is expected to grow to between $4 billion to $5 billion in 10 years. With the growth of the Homeowners' Earthquake Insurance Fund, the potential exists for increased coverage in the future."
David Crocker, a spokesman for the Western Insurance Information Service told The Journal of Commerce officials of the insurance industry had no problem with Gov. Deukmejian's plan. There was a concern over the actuarial data prepared by the governor's staff.
''We are pleased the governor is looking at this matter because it is a serious one, said Mr. Crocker. "We are going to urge a private actuary be retained to see if the premiums are sufficient to meet the cost."
The governor's bill is being introduced by Senator Frank Hill, R- Whittier.