California Homeowners Insurance Questions

In Newsletter Content by Brandon St. Clair

Some common questions and answers about California homeowners insurance

Why do I need to buy California homeowners insurance?
In some cases, we do not have a choice. For example, if the mortgage company holds the deed to our property, we will be required to have homeowner’s insurance to protect their investment in our home. Aside from this, our homeowner’s insurance policy will protect our home and our personal property. It will also give us liability coverage for injury to other people or other property.

Does CA location matter?
The location of our CA home does matter for several reasons. Certain perils, such as mudslides and earthquakes, may be more prevalent in one area of the state over another. If we live in one of these areas, we will want to be sure and purchase flood and earthquake insurance. Location is a primary factor in how our insurance is priced, as insurance is priced based on the risk involved.

What helps or hurts my premium?
There are many factors, including zip code, that will affect our premium. Some of these factors include the age of our home, type of construction, and how close we are to local emergency services. Frame construction is priced higher. Our premium will also go up or down depending on our policy limits and the deductible we choose.

Is personal property covered with California homeowners insurance?
The contents of our home and other personal belongings that we own are covered by our California homeowners insurance. The coverage limit is generally 50 percent of the value assigned to our home. Higher value items should be disclosed and separately listed on the policy.

What is the difference between Replacement cost value and Actual cash value?
We can purchase our homeowner’s insurance on a replacement cost or actual cash value (ACV) basis. A replacement cost policy will pay the amount to repair or replace our lost or damaged possessions, without depreciation. An actual cash value (ACV) policy factors in depreciation, so the amount we receive after the loss may not be quite enough to replace the personal property. It is very important to know the difference, so we know what to expect in the event of a loss. ACV language is most common, but replacement cost coverage is available and may only cost as much as 10% more each year in homeowner’s insurance premium.

What discounts can I receive on my California homeowners insurance?
It is nice to save money on any purchase we make. There are some nice discounts available for qualified applicants on CA homeowner’s insurance. Most homeowner insurance carriers offer a small discount for a modern security system. Since this is something many of us purchase anyway, it is nice to know it can help us save. Many new homes come equipped with internal sprinkler systems. Many carriers offer a discount for this type of sprinkler system. And some simple items that offer a discount on most homeowner’s insurance policies are smoke detectors and dead bolts. Another great way to save is by bundling our auto and home insurance through the same carrier.