INSURERS LIMITING POLICIES ON HOMES\Coverage tough to get, study finds.

Byline: Dawn Yoshitake Daily News Staff Writer

Fewer than 1 percent of insurance companies are freely writing homeowner policies in California, according to a state survey released Thursday.

Homeowners insurance has been difficult to obtain since the 1994 Northridge Earthquake caused billions of dollars in damage. Insurers paid out $12.5 billion in claims.

In a March survey of all insurers licensed to write homeowners policies in California, the number of companies that sell coverage with no tight restrictions dropped to under one-half percent, compared with 5 percent in September and 7 percent in May, the state Insurance Department said.

Meanwhile, the number of companies placing tight restrictions on coverage - such as fault-line proximity or a home's age - climbed from previous studies.

Eighty-one percent of the 77 companies surveyed said they limit their policies with tight restrictions, compared with 73 percent in September and 55 percent last May, said department spokeswoman Candysse Miller.

But more companies are selling new policies, however limited, Miller said. Insurers representing 86 percent of California homeowners are writing new policies, compared with 38 percent in May.

Nonetheless, the survey does not bode well for the thousands of homeowners insured by 20th Century Industries Inc., which suffered staggering losses in the quake.

Starting in July, 20th Century's 175,000 homeowners will need to find new carriers as their policies expire because the Woodland Hills-based company is leaving the homeowners insurance business.

Customers of 20th Century haven't flooded the office with requests for policy referrals.

"We notified our customers in 1994 of the actions we'd have to take," said Rick Dinon, 20th Century spokesman. "The calls haven't come in yet, but like most of us who procrastinate filing our taxes, we'll probably get calls when their policies come up for renewal."

Miller said the release of the study was not related to the pending vote before the state Legislature on the California Earthquake Authority fund. The fund would serve as a $10.5 billion earthquake coverage insurance pool via contributions from the industry and homeowners' insurance premiums.

The Legislature is scheduled to vote on the fund's creation in the next few weeks and its passage is important to the Department of Insurance. The department may lose $1.8 billion in private funds April 1 that were set aside for the fund's creation.

"We did the studies because we knew something was happening out there with finding insurance," Miller said. "Our statistical analysis department said it was time to take a look at it and be able to say, 'This is what's happening out there.' "