Residential Insurance: Homeowners and Renters (information guide, text version)
Published by California Department of Insurance. Jurisdiction CA.
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The guide describes a homeowners policy in coverage parts: Coverage A Dwelling, Coverage B Other Structures, Coverage C Personal Property, Coverage D Loss of Use, Coverage E Personal Liability, and Coverage F Medical Payments to Others.
claim cdi-residential-insurance-guide#c1Coverage B Other Structures is normally limited to 10 percent of the Coverage A limit.
claim cdi-residential-insurance-guide#c2Coverage C provides protection for the contents of the home and other personal belongings owned by the insured and other family members who live with the insured, and additional amounts of insurance may be purchased.
claim cdi-residential-insurance-guide#c3The contents limit is generally around 50 percent of the dwelling amount, and the guide states that this is a guideline only.
claim cdi-residential-insurance-guide#c4Coverage D Loss of Use is normally limited to 20 percent of Coverage A.
claim cdi-residential-insurance-guide#c5Under the heading for what is typically covered by a homeowners policy if damage is caused by, the guide lists fourteen causes of loss: fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism and malicious mischief; theft; volcanic eruption; falling objects; weight of ice, snow, sleet; sudden and accidental water damage; and breakage of glass.
claim cdi-residential-insurance-guide#c6The guide lists typical exclusions: flood; earthquake; earth movement; termites; insects, rats or mice; water damage caused by seepage or leaks; losses to a house vacant for 60 days or more; mold; wear and tear or maintenance; war; insurrection; tidal wave; neglect; and nuclear hazard.
claim cdi-residential-insurance-guide#c7The guide carries the instruction to read the exclusions in the insurance contract.
claim cdi-residential-insurance-guide#c8Coverage on certain types of property especially susceptible to loss is limited: jewelry, antiques, furs, collectibles, fine arts, firearms, silverware, and money.
claim cdi-residential-insurance-guide#c9The limited coverage amounts for specific types of personal property are not separate limits in addition to the contents limit; they are included in the overall contents limit and represent the maximum paid out for that specific type of personal property.
claim cdi-residential-insurance-guide#c10The guide defines the deductible as the amount of loss that the policyholder is responsible to pay up-front before covered benefits from the insurance company are payable.
claim cdi-residential-insurance-guide#c11The guide states that if the insured can afford to take a bit more of the risk, a larger deductible may significantly reduce the premium.
claim cdi-residential-insurance-guide#c12The guide states that an actual cash value policy will not completely replace the home, that a replacement cost policy improves the chances of being able to completely rebuild, that a policy cannot be sold as a guaranteed replacement cost policy unless it will pay to completely rebuild the home regardless of the coverage limit, and that other types of replacement cost policies will pay the policy limits plus a certain percentage above those limits.
claim cdi-residential-insurance-guide#c13For renters policies, the guide states that Coverage E Personal Liability is generally subject to a minimum of $100,000 and Coverage F Medical Payments to Others is generally subject to a minimum of $1,000.
claim cdi-residential-insurance-guide#c14The guide states that the landlord does not provide insurance for the tenant's personal property.
claim cdi-residential-insurance-guide#c15The guide identifies itself on the page as Form 401, Revised January 2026.
claim cdi-residential-insurance-guide#c16The guide lists the coverages of a homeowners policy as "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."
claim cdi-residential-insurance-guide#c17The guide describes Coverage D as follows: "This coverage will help with additional living expenses if your home is damaged by a peril insured against to the extent that you cannot live in your home. These expenses include, but are not limited to, housing, meals and warehouse storage. Coverage D is normally limited to 20 percent of Coverage A."
claim cdi-residential-insurance-guide#c18The guide states: "After a residential policy has been in effect for sixty days, the insurance company can only cancel a policy for reasons specified by law, which include; nonpayment of premium, fraud, material misrepresentation, or physical changes in the insured property that increase any hazard insured against."
claim cdi-residential-insurance-guide#c19The guide defines material misrepresentation as "A false statement given by an applicant of any important fact that had the insurance company known the truth, it would not have insured the risk."
claim cdi-residential-insurance-guide#c20The guide states: "The condominium association generally purchases insurance for the building structure and common areas, such as corridors and walls."
claim cdi-residential-insurance-guide#c21The guide states: "Like renters insurance, condominium unit-owners insurance provides coverage for personal property, loss of use, personal liability and medical payments to others. However, it also includes coverage for damages to the interior of the unit and improvements for which the unit owner is responsible to maintain in accordance with the governing rules of the condominium association."
claim cdi-residential-insurance-guide#c22The guide states: "Loss assessment may be an important coverage for you to consider, because it covers you for certain assessments that the condominium association makes as a result of a loss."
claim cdi-residential-insurance-guide#c23The dwelling limit should be the amount it would cost to replace your home, which may have nothing to do with the purchase price or the current market value.
claim cdi-residential-insurance-guide#c24Homeowners should base the limit on the cost of labor and materials necessary to rebuild the dwelling, not fluctuations in the real estate market.
claim cdi-residential-insurance-guide#c25Under an actual cash value settlement the recovery is reduced by a fair and reasonable deduction for physical depreciation, and with a replacement cost policy the chances that you will be able to completely rebuild your home are better.
claim cdi-residential-insurance-guide#c26Insurance coverage for losses resulting from floods is generally not provided in a homeowners or renters policy.
claim cdi-residential-insurance-guide#c27When an insurer writes your homeowners coverage in California, the insurer is legally obligated to offer you earthquake coverage for an additional premium.
claim cdi-residential-insurance-guide#c28What was previously called Extended Replacement Cost Coverage is now called Limited Replacement Cost Coverage.
claim cdi-residential-insurance-guide#c29The dwelling limit should be the amount it would cost to replace the home, and this may have nothing to do with the purchase price or the current market value of the home, as homeowners insurance does not generally cover the value of the land upon which the dwelling sits.
claim cdi-residential-insurance-guide#c30When determining the amount of coverage to purchase, consumers should consider the cost of labor and materials necessary to rebuild the dwelling, not fluctuations in the real estate market.
claim cdi-residential-insurance-guide#c31Insurance companies have their own formulas for evaluating replacement cost, and because those formulas are unique to each company, different insurers may suggest or require different limits of coverage for the same dwelling.
claim cdi-residential-insurance-guide#c32In a section summarizing key legislation, this guide describes Senate Bill 1855 (2004) as changing the use of the words Extended Replacement Cost Coverage in the California Residential Property Insurance Disclosure to Limited Replacement Cost Coverage. The page states this only as a description of that 2004 bill's effect on the wording of that disclosure; it does not state that Extended Replacement Cost Coverage is generally now called Limited Replacement Cost Coverage, and it gives no rationale specific to the change of words.
claim cdi-residential-insurance-guide#c33A policy cannot be sold as a guaranteed replacement cost policy unless it will pay to completely rebuild the home regardless of the coverage limit.
claim cdi-residential-insurance-guide#c34Unless the policy has building code upgrade coverage, the insurance company may not pay for changes needed to bring the structure up to current building codes.
claim cdi-residential-insurance-guide#c35CDI advises consumers to ask their agent, broker, or insurer whether they automatically review or increase limits on a regular basis, or whether they offer an automatic inflation guard option.
claim cdi-residential-insurance-guide#c36In its actual cash value discussion this guide uses the formulation the policy limit or the fair market value of the structure, whichever is less.
claim cdi-residential-insurance-guide#c37CDI describes a homeowners policy as divided into a property section with Coverage A dwelling, Coverage B other structures, Coverage C personal property and Coverage D loss of use, and a liability section with Coverage E personal liability and Coverage F medical payments to others.
claim cdi-residential-insurance-guide#c38CDI states that Coverage A provides major property coverage protecting the house and attached structures if damaged by a covered peril.
claim cdi-residential-insurance-guide#c39CDI states that Coverage B other structures is normally limited to 10 percent of the Coverage A limit, and that Coverage D loss of use is normally limited to 20 percent of Coverage A.
claim cdi-residential-insurance-guide#c40CDI states that certain personal property categories such as jewelry and firearms are subject to special limits that cap the amount paid.
claim cdi-residential-insurance-guide#c41CDI states that an actual cash value policy will not fully replace a destroyed home because it subtracts depreciation and pays either the repair cost less wear and tear or the policy limit, whichever is less.
claim cdi-residential-insurance-guide#c42CDI states that a policy cannot be sold as a guaranteed replacement cost policy unless it will pay to completely rebuild the home regardless of the coverage limit, and that other replacement cost variants pay the policy limits plus a certain percentage above those limits.
claim cdi-residential-insurance-guide#c43CDI warns that unless the policy has building code upgrade coverage, the insurance company may not pay for changes needed to bring the structure of the home up to current building codes.
claim cdi-residential-insurance-guide#c44CDI advises reviewing the dwelling limit initially and upon renewal, discussing any modifications to the home in writing with the agent, broker, or insurer, and contacting local general contractors to ask the current price per square foot for a home similar to your own.
claim cdi-residential-insurance-guide#c45CDI advises keeping an inventory of personal property listing all items owned, the dates purchased, and the price, and offers a free Home Inventory Guide.
claim cdi-residential-insurance-guide#c46CDI states that Coverage D reimburses housing, meals and warehouse storage when a covered loss makes the home uninhabitable, and advises keeping receipts for all additional living expenses and submitting them to the company for reimbursement consideration.
claim cdi-residential-insurance-guide#c47CDI warns that if you shop by comparing prices only and not by comparing coverage, you are doing yourself a disservice.
claim cdi-residential-insurance-guide#c48CDI notes that SB 1855 (2004) requires insurers to disclose, in the California Residential Property Insurance Disclosure and on the declarations page, that the cost to rebuild your home may be different from your homeowners policy limits, and that insurers must distribute the California Residential Property Insurance Bill of Rights every other year.
claim cdi-residential-insurance-guide#c49
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Reviewer notes
Published: 2026-01 (the page carries the line Form 401 Revised January 2026) Effective: not stated on the page