Home Insurance California
A standard homeowners policy will contain two parts. Part I provides you coverage for your property (A, B, C and D) while part II provides you liability coverage (E and F).
- Coverage A – Dwelling
- Coverage B – Other Structures
- Coverage C – Personal Property
- Coverage D – Loss of Use
- Coverage E – Personal Liability
- Coverage F – Medical Payments to Others
Unlike driving a car, you can legally own a home in California without homeowners insurance. However, if you have a mortgage or finance your home, your lender most likely will require you to carry some form of home insurance coverage to protect your home in case of damage cause by unforeseen circumstances, such as fires or natural disasters.
How Much Homeowners Insurance Coverage Do I Need?
Your insurance agent will usually have tools and resources to help you decide how much dwelling coverage to buy when you first get homeowners insurance. Ideally, your Coverage A limit should equal the full replacement cost of your home. Note that replacement cost and market value are not the same. The market value, which includes the price of your land will depend on the current real estate market.
All other limits of coverage are typically determined by the standard percentages listed below:
|Coverage Component||Typical Limit of Coverage|
|Coverage A – Dwelling||You Chose|
|Coverage B – Other Structures||10% of Dwelling Coverage Limit|
|Coverage C – Personal Property||50% of Dwelling Coverage Limit|
|Coverage D – Loss of Use||20% of Dwelling Coverage Limit|
|Coverage E – Personal Liability||You Choose|
|Coverage F – Medical Payments||You Choose|
What Is Covered By My California Homeowners Insurance Policy?
Coverage A – Dwelling coverage provides protection for your dwelling or primary structure and attached structures, like your garage, if they are damaged by a covered peril. See below for a list of commonly covered perils.
Coverage B – Other structures coverage provides protection to your structures or buildings on the premises that are not attached to the primary dwelling. Structures typically covered include tool sheds, back houses, detached garages, etc. This coverage is typically limited to 10% of your Coverage A limit. However, you can usually add more coverage for an additional premium.
Coverage C – Personal property coverage provides protection for the contents of your home and other personal belongings owned by you and other residents of the household. This coverage is typically limited to 50% of coverage A. Your personal property limits can be adjusted to established agreed upon values by you and the insurance company for an additional cost.
Personal property coverage typically has set limits on certain types of property that are especially susceptible to loss, such as:
- Fine Arts
If you own property listed above, you may want to consider scheduling these items separately. Scheduling your personal property will allow for additional limits of coverage for high-value items.
Coverage D – Loss of use coverage will help you with any additional living expenses if your home is damaged by a covered peril and you cannot live in your home. These expenses include, but are not limited to, temporary housing, meals, and warehouse storage. This coverage is typically limited to 20 percent of Coverage A.
Coverage E – Personal liability coverage will provide you protection in the event you or a resident of your household are legally responsible for injury to others. This coverage normally provides a defense and will pay damages, as deemed appropriate by the insurance company. Of course, there are exceptions. The liability coverage will not protect you in all situations, such as an intentional act. All of the exclusions and specific language can be found in your policy.
Coverage F – Medical payments to others coverage pays for reasonable medical expenses for anyone who is accidentally injured on your property. For example, if your neighbor is injured while helping you paint in your living room, the medical payments portion of your homeowner’s policy may pay for necessary medical expenses. medical payments coverage does not apply to your injuries or injuries of those who reside in your household and is not a substitute for health insurance. Business activities are also excluded. All of the exclusions and specific language can be found in your policy.
Are There Different Kinds of California Homeowners Insurance Policies?
Owner-occupied homeowners insurance policies represent a “package” of coverages for your home, personal property, and liability. These packages range from basic to broad and can easily be identified by their policy form.
|Policy Form||Structural Coverage||Property Coverage|
|HO-0 (dwelling fire)||Basic “named-perils”||No Coverage|
|HO-1 (basic)||Basic “named-perils”||Basic “named-perils”|
|HO-2 (broad)||Broad “named-perils”||Broad “named-perils”|
|HO-3 (special)||Special “all-risks”||Broad “named-perils”|
|HO-4 (renters)||No Coverage||Broad “named-perils”|
|HO-5 (comprehensive)||Special “all-risks”||Special “all-risks”|
|HO-6 (condo)||Basic “named-perils”||Broad “named-perils”|
|HO-8 (modified)||Special “all-risks”||Basic “named-perils”|
What are the Different Policy Forms and What do they mean?
Basic “named-perils” Form – As its name suggests, is the least comprehensive of the three coverage options. The important thing to note about reading Basic Form policies is that they cover only named perils. This means that if a coverage is not specifically named in the policy, there is no coverage. If something happens to your home that’s not on the list, you’re not covered. A Basic Form policy tends to be quite limited in scope and should be used with care.
Broad “named-perils” Form – Broad Form coverage is more expansive than Basic Form coverage. It includes coverage for all the hazards included in a Basic Form policy plus several additional hazards which are expressly named. Like with a Basic Form policy, a Broad form policy covers only named perils. Again, if a coverage is not specifically named in the policy, that coverage is excluded. Fortunately, the Broad Form is designed to cover the most common forms of property damage.
Special “all-risk” Form – Special Form coverage is the most inclusive of the three options. The difference with Special Form policies is that they should be read differently from how you would read a Basic or Broad Form policy. In a Special Form policy, instead of the document listing what’s covered, all perils are covered except for the exclusions specifically listed in the policy. In this sense, reading a Special Form policy is kind of like the opposite of reading a Basic or Broad Form policy. All unlisted perils are covered perils. This can be extremely beneficial to the insured since Special Form coverage makes allowances for all kinds of random hazards one might never expect. However, if something happens to your home, and it is on the exclusions list, the policy will not provide coverage.
How Does California’s Average Homeowners Insurance Premium Rank vs The National Average?
The graph below shows that California has been able to control their average homeowners insurance premiums significantly better than the rest of the nation. In 2007 California’s average homeowners premium was $103 more expensive than the National average. However, by 2014, California had turned the tables and managed to come in $81 bellow the national average.
Who Are the Best Most Responsive, Homeowners Insurance Carriers?
There are over 150 California admitted insurance companies that do business in our State. So just like the home you live in, your ideal insurance coverage is going to be unique to your circumstances, your preferences, and your needs. As a result, you need an homeowners insurance agency that offers a large variety of vetted carriers—and can find you the best policy for the best price. Here is a list of the top 54 insurance companies by market share, as of 2016. In no particular order:
- American Modern
- Amica Mutual
- Bankers Standard
- California Capital
- Century National
- Civil Service Employees
- Fireman’s Fund
- Foremost Insurance
- General Ins
- Horace Mann P & C
- Liberty Ins Corp
- Mercury Ins Group
- Pacific Property And Casualty
- QBE (Balboa)
- Sequoia (Personal Express)
- Stillwater Ins Co
- Tokio Marine America
- Unigard Group
- AIG Prop Cas
- American Reliable
- CSAA Ins Exch
- California Casualty
- Coastal Select Ins Co
- Farmers (Fire Ins)
- First American Specialty
- Foremost Property and Casualty
- Hartford (Sentinel)
- Horace Mann
- IDS Property Casualty
- MAPFRE Group
- Metropolitan Direct
- Oregon Mutual
- Pacific Specialty
- State Farm
- Stillwater Prop & Cas Co
- Universal North America
- Western Mutual/Residence
What Perils are Generally Covered by My Homeowners Policy?
Standard homeowners policies generally cover a wide range of potential disasters, from fire and lightning strikes, to winter storm damage caused by weight of ice and snow, to windstorms and tornadoes. Most homeowners policies will cover all the common disasters listed below; however, some policies may only provide limited coverage. It is important to check your insurance policy for the specific perils covered.
- Fire or lighting
- Riot or civil commotion
- Damage from electrical current
- Windstorm or hail
- Vandalism & malicious mischief
- Tearing, cracking, or bulging
- Breakage of glass
- Falling objects
- Weight of ice, snow, sleet
- Volcanic eruption
What Perils are Generally Excluded by My Homeowners Policy?
The most common exclusions on a standard homeowners insurance policy are flood, mold, earthquake, “wear and tear”, and earth movement. When an insurer writes your homeowners coverage, California law states that they are also obligated to offer you earthquake coverage every year for an additional premium. The earthquake coverage may be written through the California Earthquake Authority (CEA), directly by the insurer, or by a separate provider.
Other common exclusions include:
- Insects, rats or mice
- Earth movement
- Ordinance or law
- Water damage caused by seepage or leaks
- Losses to home vacant for 60+ days
- Wear and tear or maintenance
- Intentional loss
- Nuclear hazard
- Tidal wave
You may elect to buy specialized homeowners coverage that provides additional protection for your dwelling and contents beyond the standard coverage limitations in most homeowner’s policies. Regardless, it is still important to read the exclusions section in your insurance contract.
What Discounts are Available for My Homeowners Insurance Policy in California?
You can score major discounts for things like having an alarm system, emergency sprinklers, well-maintained walkways, and up-to-date wiring. If you can show that you’re home is less of a risk, they’ll reward you by lowering your premiums. The list below can help you figure out what discounts you’re already eligible for—and advise you on what you can do to lower your insurance costs even more.
- Multi-Policy Discount
- Group Affiliation Discount
- Claims Free Discount
- Early Signing Discount
- Automatic Payments Discount
- Senior Discount
- Hardwired Smoke Detector Discount
- Green Home Discount
- Earthquake Retrofit Discount
- Pay-in-Full Discount
- Non-Smoker Discount
- Protective Devices Discount
- Insured to Value Discount
- Newly Purchased Home Discount
- Newly Renovated Home Discount
- Age of Construction Discount
- Marriage Discount
- Bundling Discount
- Home Maintenance Discounts
- Renewal Discount
- Career Related Discount
- Fire Sprinklers Discount
What If I Can’t Find Homeowners Insurance for My Home?
Homeowners who are unable to find insurance coverage on the open market can obtain special coverage through the California Fair Access to Insurance Requirements (FAIR) Plan. This is an association of all licensed property insurers in the state. The FAIR Plan provides the most basic level of fire insurance coverage.
The FAIR Plan is an association located in Los Angeles comprised of all insurers authorized to transact basic property insurance in California. Coverage is available to all California property owners, provided basic underwriting guidelines are met. The FAIR Plan provides insurance as a last resort, and should be used only after a diligent effort to obtain coverage in the voluntary market has been made. We recommend that all FAIR Plan policyholders shop for a different insurer at least annually in order to search for coverage that is more comprehensive than what is offered by the FAIR Plan.
Important Note: The FAIR Plan Dwelling Fire Policy is a named peril policy, which provides coverage only for damage caused by the specific causes of loss listed in the policy.
The Insurance You Need—At a Price You Can Afford
Sunsets on the ocean. Warm breezes year-round. Palm-lined streets, Spanish tiled roofs, majestic redwoods a short drive away. Living in California really is a dream come true. But like any dream, it has the potential to turn into a nightmare. Wildfires and earthquakes are real California possibilities—in addition to the usual homeowner headaches like burglary, damage, and accidents. This is where homeowners insurance come into play.
Great homeowners insurance gives you the peace of mind of knowing you’re covered: no matter what. At Shift Insurance, we can help you find the best insurance for the best price. Our agency isn’t tied down to one company. That means we can offer you a multitude of home insurance options, with no strings—or fees—attached.
Come home to better coverage. Call us today.