By WADE DANIELS Staff Reporter Angered by higher prices for less coverage, many San Fernando Valley area homeowners are deciding not to buy earthquake insurance under the new California Earthquake Authority, according to insurers and others. Although state officials say they have no hard numbers on the number of Valley policies, individual brokers say there are selling far less quake insurance under the CEA than they did before its creation last year. Jan Hardee, an agent with Prudential Insurance Co.’s Tarzana office, said “nearly 100 percent” of his customers chose to add quake coverage to their home and fire coverage in recent years. But under the CEA, only about 65 percent are doing so, he said. Gabriel Kalenian, an agent with the Northridge Farmers Insurance Group office, said only about 50 percent of his clients are buying policies under the CEA. “A couple of years ago this was around 80 percent,” he said. Brokers and homeowner leaders speculate that the the decline is particularly acute in the Valley because insurance rates here are among the highest in the state. “I didn’t renew my policy this year, and a lot of people I’m talking to aren’t renewing theirs,” said Richard Close, president of the Sherman Oaks Homeowners Association. “With the CEA, my policy tripled in price and there was a substantial reduction of my coverage.” The CEA does not track the number of homeowners with policies now versus the number who had policies under the old system, said Mark Leonard, a CEA spokesman. However, Leonard said there has been a 4 percent drop in policy purchases since the CEA began selling policies last December. Statewide, there are currently 418,165 policies in California 10 percent below the number the state had projected last year, Leonard said. Currently, 141,970 policies exist in Los Angeles County, he said. The authority was formed by the state Legislature last year after private insurers demanded a rollback in their liability for earthquake damages in light of massive payouts they made in the aftermath of the 1994 Northridge earthquake. The quake buried the industry with $14.5 billion in claims, and many insurers simply abandoned the homeowners market, rather than assume the risk of another major earthquake. The policies are still sold through private company agents but are held by the authority. Kalenian said most of his new and renewal home insurance customers inquire about earthquake insurance but often refuse when they hear the terms. Essentially, he said, the state authority’s minimum levels of insurance provide far less coverage than what his customers received when Farmers sold its own policies, and they are more expensive. For example, the earthquake authority’s policies do not include coverage of a dwelling’s surrounding structures, such as fences and pools. Also, coverage for a dwelling’s contents is capped at $5,000, whereas pre-CEA minimum coverage commonly included a deductible of 10 percent for all damage to contents. With its proximity to known quake sources, Valley earthquake insurance rates are the most expensive in Los Angeles County, at between $3.90 and $5.10 per $1,000 of coverage, depending on location. In Northridge, the rate for a home built after 1960 would be $4.80 per $1,000 of coverage, according to Kalenian. Thus, $200,000 worth of coverage would cost about $960 annually. Leonard, the spokesman for the authority, said there is little room for movement since the broad terms of coverage were set by the Legislature. “People complain about our coverage, but agencies like Farmers and Allstate were already adopting them before the CEA was created,” Leonard said. “What we offer is very different from what used to be offered, but those days are gone. The Northridge quake changed everything.” The Valley may see a degree of relief from the insurance rates, as the authority’s chief Greg Butler in late July recommended an 8 percent average cut for the San Fernando Valley area. This is less than the average decrease of nine percent for the Los Angeles-Orange County metropolitan area and the state average of 11 percent. The cuts corresponded to adjustments to the quake risk model adopted by the authority. According to geologists, the model’s assessment of certain risks for the Bay Area were overstated in the model and the current amount of coverage is therefore unnecessarily high. Rate cuts are slated across the board because policy holders around the state subsidize the Bay Area.