BERKELEY, Calif. (AP) _ The city of Berkeley has lost its municipal insurance because of a recent zoning change that allows artists to use their homes as studios or workshops, officials say.

''Our insurers found out about it and they figure a lot of arts and craft materials are hazardous, so they canceled us,'' said Nancy Bellard, assistant city manager.

The cancellation, which takes effect Thursday, means the city will go uninsured until it finds a company willing to carry its policy or sets up a plan to insure itself.

''We'll go uninsured for awhile, but it's not the first time for Berkeley,'' Bellard said. She said the city couldn't find insurance during the campus unrest of the 60s, and has only carried insurance for the past six years.

The cost has rocketed in recent years, Bellard said. Last year, the city paid $265,000 for the same $20 million liability policy that it paid $49,000 for a year earlier, she said.

''Berkeley's in the same boat as everyone else and it's been going that way for three years,'' she said.

The California League of Cities says other cities without insurance include Tehema, Point Arena, Seaside, Portola, Plymouth, Lakeport and Bradbury.

Connie Barker, an attorney for the League of Cities, said the group is considering organizing a pool to provide municipal insurance for cities with such problems. But she said such an arrangement is at least six months away.