The D.C. City Council is expected to give preliminary approval next week to a bill that would protect insurance companies from libel suits when they give information to arson investigators about persons or businesses involved in suspicious fires.

Under the measure that comes before the council on Tuesday, insurance companies would be required to supply investigators with insurance records of individuals or firms suspected in arson cases.

Insurors often are reluctant to volunteer such information because of the threat of lawsuits if arson isn't proven, according to the council's judiciary committee, which approved the bill in late February.

The legislation, aimed at combating a crime that officials said did more than $10 million in damage last year, is similar to measures passed in Maryland in 1978 and Virginia in 1979 and enacted in 38 other states.

It would require insurors to give the city's fire marshal extensive, and usually confidential, information about companies or persons who have a suspicious fire or a history of casualty losses. The information would include detailed financial and personnel data or other company records that insurors keep on policyholders.

The bill has been endorsed by the city's fire marshal, fire and police departments and the Department of Insurance.

The agencies said that without the libel protection, the city could not improve on what it admits is a poor record in investigating arson.

Of more than 500 suspected arson cases reported during 1979 and 1980, there were only 21 arrests and eight convictions, according to the council's judiciary committee.

From October 1980 until last September, more than 660 fires of suspicious origin were reported. Attempts to obtain conviction statistics this week were unsuccessful. Since October, there have been 107 suspicious fires that have caused an estimated $3 million in damages, the committee reported.

"Arson is a serious crime in the city," said council member David A. Clarke (D-Ward 1), chairman of the judiciary committee. "The bill . . . will remove a real impediment" to its solution.

A lot of information on suspicious fires "is unsubstantiated," said Evalena Higginbottom, a member of Clarke's staff. "Bits and pieces are picked up here and there" by insurance agents, she said.

"If you have a lot of unsubstantiated information" and turn it over to authorities, she said, "you could be sued for libel and slander.

"Unless they could prove arson without a shadow of doubt," Higginbottom continued, the companies have had no incentive to cooperate with fire or police officials.

Information provided by the insurance companies would be exempt from the city's Freedom of Information Act, according to the bill. The measure also would impose a $10,000 fine on companies that fail to cooperate with authorities.

Agencies that will share in the information include the fire marshal, police, U.S. Attorney's Office, D.C. Corporation Counsel and federal authorities, including the FBI.

The bill, cosponsored by council member Nadine P. Winter (D-Ward 6) and supported by Mayor Marion Barry, is expected to get final approval from the council in early April. It would take effect after a mandatory 30-day review by Congress.

CHILD CUSTODY: A bill introduced recently by council member John Ray (D-At large) makes "joint custody" the preferred way to care for children whose parents divorce.

Under current law, judges must consider "the best interest of the child" in child placement cases involving divorce. "The District has one of the most progressive statutes in the country," said Lynn French, a member of Ray's staff. "This just takes it a step further" by establishing that it is in the child's best interest to be cared for by both parents.

If joint custody were not possible, according to the bill, other placement preferences would be with either parent; with a person in whose home the child has been living; or with any other person deemed suitable by the court.

Maternal preference, still the main consideration in several states, would be limited to instances where a child is still breast-feeding, according to Ray's bill, which was referred to the judiciary committee.