California Homeowners Insurance

Last Updated on September 29, 2020 by Andrew Lee

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As a soon-to-become homeowner in the State of California, there are plenty of other expenses you need to think of aside from the down payment you have to make for your purchase as well as your mortgage payments. You also need to set aside budget for buying and maintaining a homeowners insurance policy.

Many people think of California homeowners insurance as just an additional expense on their part. However, it actually plays extremely helpful roles in your life as a property owner. It comes to your rescue in the event inclement weather or other natural, as well as certain man-made damage, wreaks havoc to your home.

Average premiums for homeowners and renters insurance in California

In the year 2013, the National Association of Insurance Commissioners (NAIC) revealed that the median homeowners insurance premiums in the country was $1,096.

Homeowners paid an average of $966 putting it at the 26th place in the most-to-least expense comparison of all states

Renters, on the other hand, had a median expenditure of $203 putting the state in 13th place

According to a 2016 ValuePenguin study, the monthly homeowners insurance premiums in the state is $83.00.

Comparing these statistics with the national average, the difference between it and CA’s annual insurance premium average is .88%

Understanding the basics of homeowners insurance policy will prevent misunderstandings when the time comes to file a claim.

Coverage categories in the event of a loss

There are four different coverage categories that typical homeowners insurance policies have. These include Coverage A, used for structural losses; Coverage B, for other forms of structural losses; Coverage C, for loss of contents of a home; and Coverage D, for the loss of use of the house/Additional Living Expenses.

The Additional Living Expense portion of your policy comes into play in the event that you find yourself in a situation wherein you can’t live in your house for a period of time. Your insurer will reimburse you for expenditures associated with renting another place temporarily, as well as food, gas, and mileage. Click here for more info. 

Key Facts and Market Trends in California: The NAIC conducted another survey assessing the key facts and market trends in the country. According to the organization, as of the year 2015, there are 13 domestic insurance companies in the State of California. The total number of both domestic and licensed foreign insurers, on the other hand, is 763.

California’s waiting period for insurance company settlements

When it comes to homeowners insurance, policyholders share the same sentiment: concerns about how long they have to wait before their insurer settles their filed claims.  Fortunately, the United Policyholders answered this, reporting that usual time frame for repairing, rebuilding, or replacing takes around 18 to 24 months. It still depends on the extent and the severity of the damage though.

Rules on cash value, replacement cost and depreciation in California

Understanding the basics of your homeowners insurance policy will prevent misunderstandings when the time comes for you to file a claim. You need to arm yourself with the knowledge of the most critical terms used in this industry, including Actual Cash Value (ACV), Depreciation, and Replacement Cost.

Subtracting Depreciation Value from the Replacement Cost gives you the Actual Cash Value. To arrive at the ACV, insurance firms use factors including the property’s age and condition at the time of the loss or the damage. Replacement cost is the required amount of money to replace a lost/damaged property. You can expect to get a replacement in the form of something new or something equal in terms of quality and type.

Protect your home and its contents: don’t forget to have it insured.