California and its scenic locales are a sight for sore eyes. Nothing can surpass its beauty. But ask the residents of the state and you will know the price people have to pay to live amid such awesome surroundings. While the above ground threats are still combatable, who can fight the unpredictable below ground furies?
Fires, mudslides, floods, and earthquakes are a few of the natural disasters common to this state. Earthquakes in particular are the most dreaded. Not only do they wreck havoc on the state but the toll they take in terms of damages to life and property are also immense. Earthquake insurance is therefore the best way to protect one of your most valuable assets: your home.
Earthquake Insurance Offer and Response
In earthquake country, most of the homeowners are not averse to the idea of using the insurance to offset the expense of earthquake repairs. Insurance companies and agents dealing with residential insurance are required by California’s laws under the California Insurance Code (CIC) Section 10081 to offer earthquake coverage for the peril of earthquake. The mandatory earthquake offer must:
- Be made in writing
- Describe coverage amounts
- List the deductible offered
- State the policy premium
One has 30 days from the date of mailing by the insurance company to accept or reject the offer of earthquake coverage. In case the company receives no response from the prospective insured then, they consider the offer rejected. That however, does not mean that they can cancel, refuse or reject renewal of one’s policy.
Earthquake Coverage and how it works
All offers for earthquake insurance must include covers for your home and your personal possessions (this amount should not be less than $5,000 or 10% of the covered dwelling loss). For any additional living expense (ALE) incurred, it must be at least $1,500. If the house you propose to insure is not inhabited by you or any member of your family you may waive the ALE cover. CIC Section 10089(b) maintains that the maximum that can be charged as a deductible is 15% of the policy dwelling limit.
Additionally, brokers and insurance companies also offer what is known as a monoline "stand-alone" policy. Some specialized insurance companies offer this but they do not enforce the fact that you need to buy all your policies from them to avail of this feature.
Other types of Covers
While the basic / standard homeowners insurance policies are the same in each state, there are a few additional coverage plans. They are:
Building Code Upgrade (BCU) coverage will offer you the requisite amount if you need to make your home compliant with the prevalent Building and Safety Codes. This provision is not present in the insurance policy but can only be claimed if you are rebuilding or repairing a portion the building that was damaged. If you have an older policy, this coverage could save you money in the event your home has to be rebuilt.
Structures other than the dwelling coverage will extend itself to buildings that are on the property premises but are not attached to the dwelling. These structures may comprise of: sidewalks, driveways, garages, yard fixtures, and private or decorative fences.
With so many permutations and combinations, extensions and riders, you need to chalk out what may be best suited to your profile before making up your mind about the kind of homeowners insurance you seek.
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