California homeowners insurance coverage is an important component of your finances, your home, and keeping your family secure. In a state where wildfires, earthquakes, flooding and other disasters are relatively common, carrying good CA homeowners insurance coverage is a major priority. Finding comparative quotes is easy and quick using online quote tools like ours that allow you to get several quotes on your California homeowners insurance coverage in a matter of minutes and sometimes even seconds.
Homeowners insurance covers a multitude of perils that may occur causing you to lose your home and/or its contents. The right insurance policy will provide you with enough money to replace your home and everything in it without causing undue financial difficulty.
However, you need to be familiar with homeowners insurance, what it is and what it covers to make sure you make the best choice when it comes to protecting your home.
Perils Covered By California Homeowners Insurance Coverage
- Fire, including smoke damage
- Storm Damage, including wind and hail
- Explosion
- Theft
- Vandalism
- Aircraft Impact
- Civil Commotion
There are typical exclusions on homeowners policies as well, two that California residents should pay particular attention to are earthquake and flood coverage. Because of the frequency of these types of losses in the state, homeowners should look into the possibility of carrying additional policies to specifically cover them.
Additions To Your California Homeowners Insurance Coverage
By law, your homeowners insurance provider must offer earthquake insurance to homeowners in the Golden State. You have 30 days in which to accept the offer; if you don’t then the company considers the offer rejected. The conditions on an earthquake policy are much different that that of the regular homeowners policy, so do not assume that they are the same.
Read your earthquake policy carefully. The deductible may be as high as 15% of the home’s coverage. The contents may be covered as low as 10% of the dwelling coverage, but not less than $5000. Additional living expenses will also be covered for things like temporary accommodations, meals and more while your home is being replaced, but this part may also have limitations that are different than your main homeowners coverage.
Flood insurance is also very important in California. The federal government has taken measures to make sure that flood insurance is available to everyone, since flooding is the top natural disaster in the country. One important thing to keep in mind is that it takes 30 days for a flood policy to be effective, so you need to think about such coverage before the forecast announces impending bad weather. Be aware that there are maximum levels of coverage for flood insurance and that these policies must also be carefully reviewed to make sure you understand the details. Talk to your homeowners insurance agent about obtaining flood coverage.
California has a FAIR (Fair Access to Insurance Requirements) plan, so that everyone can get fire insurance coverage. The plan was put in place in the 1960’s after a string of fires and riots made it nearly impossible for certain homeowners to obtain fire insurance because of the risk they posed to insurance companies. The FAIR plan is sponsored by California insurers and provides a basic fire insurance policy to protect home and personal possessions.
A homeowner is only eligible for this plan after he has received 3 written rejections from 3 different insurance companies. The policy issued by FAIR is very limited. It is strictly fire coverage and does not cover losses by theft and other perils, nor is liability coverage built in. After carefully reviewing the policy to fully understand what it does and does not cover, a homeowner may want to get a wraparound policy to take care of the things missing from the fair plan.
2 Types Of California Homeowners Insurance Coverage
There are 2 radically different ways that coverage replacing home and contents treats the homeowner. It is important to understand the difference and make the best choice when taking out coverage.
Actual Cash Value (ACV): This type of coverage is limiting. It replaces your home at the value the market places on similar homes, up to the policy limit. Therefore, if you were to suffer a loss and have to replace your home, you may not have enough insurance money to do so.
Often the actual cost to replace a home exceeds the average value of a similar one, in which case you are simply underinsured and have to put up more of your own money or replace your home with something smaller. In regards to your contents, actual cash value gives you the cost of the items minus any depreciation that has occurred due to age, use or other factors. You can end up with a lot less in your pocket than your items are actually worth to you.
Replacement Cost Value: This coverage will fully reimburse you for the true cost to replace your loss with new, comparable items and/or home, up to the limits of your policy. This is a much more desirable type of coverage to carry than actual cash value, because it affords a better protection for policyholders to be able to put themselves back into a comparable position following a loss.
There are variations on this type of policy available from some insurers that will further protect the homeowner. Extended or modified replacement cost allows an extra percentage of protection above the policy limits in case additional costs arise in replacing your home. Guaranteed replacement cost does just what it says, covers all costs regardless of the limit on your policy.
Companies Offering California Homeowners Insurance Coverage
Here is a partial list of insurance companies offering home insurance coverage in California:
- Allstate
- Amco
- Federal
- Prudential
- State Farm
- National General
- Pacific Specialty
- Liberty Mutual
- Hartford
- Balboa
- First American
- Metropolitan
- Safeco
- Standard Fire
- Wawanesa
There are many ways to help you make a good decision in your choice of insurer. Complaints on individual companies have been documented. You can check the California Department of Insurance statistics to learn more about the complaints filed for a particular company.
Insurance ratings companies are another place to look before deciding on whether or not to use a particular company for your insurance needs. These independent rating firms give each insurer a rating based on their financial stability, ability to meet obligations present and future and their assets. If a company has unfavorable ratings, then you should probably look elsewhere for insurance because chances are they will not be around for a long time.
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