You never know if and when something will happen — whether it’s a big catastrophe such as a fire or something less destructive – so you need to be prepared!

California homeowners can face many challenges no matter what part of the state they live in. Wildfires can be a huge threat to homes and personal property in the summer and fall. We also always have to be prepared for the threat of an earthquake hitting at any time.

It’s essential to choose the right company, the right price, and the right coverage for your specific situation. 

Keep in mind, homeowners insurance is really a collection of different kinds of coverage such as fire, theft, liability and windstorm wrapped up into a single policy.

Whether you’re a current homeowner who may need to upgrade your coverage or a potential new buyer who is purchasing home insurance for the first time, review these steps so you have the right coverage for YOU:

How Do You Determine Coverage?

Your coverage should be based on the square footage of your home, but it must also factor in how much it will cost per square foot to rebuild in case of disaster.  

The cost of a home in California right now is probably 20-40% more expensive than the national average because of the building code we have here, so go a little higher than your insurance company may suggest may be a good option.

Your insurance company will most likely require you to purchase coverage that insures 80% of the replacement value of the home.

Be sure to take into consideration everything that you have inside the home, which will also need to be replaced in the event of disaster.

Do You Have Enough Coverage?

Studies show that nearly 60% of homes in the US are underinsured by at least 18%. This means that if there is a total loss, like a fire, the homeowner may find they are responsible for a significant portion of the rebuilding cost. For example, if your home were to burn in a fire outside of the cost to rebuild you may even have to pay for the ashes to be removed for your home which are addition cost you may not have expected to incur. An insurance advisor can help you navigate your home valuation and will help eliminate confusion and help ensure an appropriate settlement in the event of a loss.

Make sure that your deductible is set at a price that you can afford in the event that you must rebuild or do extensive repairs to your home.

If you’ve got a special art collection or a home office with equipment and supplies, you should be sure to let your agent know so that they can inform you about any additional riders that might be necessary.

What About Flood Insurance?

One of the main things I tell people to do before buying a home is to see if that home is in a flood zone. This may have an impact on your monthly cost you may have not accounted for and it is key to check this before you get into escrow. You don’t want to fall in love with a home and then when it is time to close you find the insurance is too high for you to afford. You can check if your home is in a flood zone at https://www.fema.gov/flood-maps.

Flood insurance isn’t mandated by the state of California, but some homeowners need to purchase coverage as a requirement of their mortgage lenders. Flood insurance is also a good consideration if you live within a floodplain, even if the area isn’t in a high-risk flood zone.

Flood insurance won’t cover all problems and each policy had limits, you may easily have to pay hundreds or even thousands of dollars in expenses yourself if you have no coverage in place at all.

Do I need earthquake insurance?

I think it is smart for all homeowners in California to have earthquake insurance. California has plenty of active fault lines that may put our homes at risk every day. Earthquake insurance isn’t covered by your standard homeowner insurance policy and like flood insurance isn’t required by most states or mortgage lenders.

Speak with your insurance advisor, but earthquake insurance may only cover direct physical loss in a specified period of time (typically 72 hours of seismic activity), including loss due to volcanic damage. There are three primary types of earthquake insurance coverage.

• Dwelling: Covers the cost of rebuilding the exterior and interior structure of your home, depending on construction materials. We don’t have may homes built with brick and stone in California but they are excluded because they are at greater risk of damage.
• Personal property: Covers the cost to replace damaged or destroyed personal property, with special limits placed on valuables like jewelry, furs, and collectibles.
• Additional living expenses: Covers the cost of living outside of your home if it is temporarily uninhabitable, including accommodations, transportation, and dining.

Some insurers will offer earthquake coverage in partnership with a local or national government groups such as California Earthquake Authority (CEA). The CEA insures over 1 million households in California making it one of the world’s largest providers of residential earthquake insurance. They offer a  earthquake insurance calculator that allows you to estimate what your earthquake insurance might cost. You cannot buy a earthquake policy through the CEA but purchased through a residential insurance company.

Do I need Fire Insurance in CA also?

Verisk Analytics, a data analytics company that assesses insurance risk, 4.5 million U.S. homes have been identified as being at high or extreme risk of wildfire. According to the National Interagency Fire Center, more than 2,500 homes in the U.S. are destroyed every year because of wildfires.

With droughts due to little rain and excessive heat being some of the concerns, people are the #1 cause of wildfires, according to data from the Wildland Fire Management Information and U.S. Forest Service Research Data Archives. Many wildfires are started by cigarettes, campfires that have been left alone, burning debris, malfunctioning or improperly used equipment, and arson.

Your standard homeowner insurance policy will cover damage incurred by a fire. Your policy has several coverage types to help repair or rebuild the home, replace belongings and, if necessary, pay for temporary housing if you can’t live in the home.

What if I live in a Townhome or Condo?

In a condo, usually, the interior is covered by the owner, and everything else is covered by the association. Check with the HOA before you buy the condo to have a clear understanding on what is covered.

In a townhouse, sometimes the owner is responsible for both the interior and exterior because everything on the land it’s built on is owned by the individual.

Do You Need to Upgrade?

For current homeowners, meet with your insurance agent to discuss what coverage you have now and let them know about any new home improvements or any new possessions that should be included in your policy.

Your agent will come out and document these upgrades, take photographs, and let you know if you will need additional coverage.