Insurance
Earthquake, flood, mold, earth movement and “wear and tear” are some of the perils usually excluded, and the Los Angeles area is prone to a variety of natural disasters, including earthquakes, mudslides and forest fires, all depending on where you live. Depending on your home’s location, you may select additional coverage to protect your property and belongings. You also can find out what hazards are prone to your area by visiting http://myhazards.calema.ca.gov and entering your address or city.

Fire Insurance
Parts of California are prone to brush fires. The state implemented the Fair Access to Insurance Requirements (FAIR) plan to assist consumers whose homes are located or close to high-risk fire areas and can’t find insurance with a private insurance company. Also, fire insurance plans must cover all fires that may be due to an earthquake regardless of whether you have earthquake insurance.

Earthquake Insurance
When an insurer writes your homeowners coverage, the insurer legally is obligated to offer earthquake coverage for an additional premium. The earthquake coverage may be written directly by the homeowner’s insurer, by a separate insurer or through the California Earthquake Authority (CEA). Earthquake coverage must be made in writing, and they must provide coverage for your home, personal property and additional living expenses, up to a certain amount. Many homeowners opt for earthquake insurance through the CEA, which does not sell policies directly, but collects and lists licensed member insurance companies that can help you get at CEA policy. Many policies also cover proximate cause, or damages to your home related to an earthquake but not directly caused by one. By visiting CEA’s website at www.earthquakeauthority.com, you can better decide on and understand the types of earthquake insurance available to you.

Replacement Cost Vs. Actual Cash Value
A homeowners insurance policy in California generally falls in two categories: replacement cost coverage or actual cash value.

Replacement Cost coverage pays to replace whatever was damaged, regardless of depreciation, but only up to your policy limit. Other replacement cost coverage types include extended/modified RCC and Guaranteed Replacement Cost Policies. The former provides a percentage above your policy limit to rebuild your home. The latter is harder to come by, but it will pay to replace your home no matter the cost.

Actual Cash Value pays what your home was actually worth, but only up to the policy limit. Other types of coverage include building code upgrade (to provide for upgrades during the rebuild), personal property, loss of use, structures other than dwellings and additional living expenses (covers increased living expenses such as food, transportation and storage while you rebuild).

— Factors That Affect Your Premium
Your premium will be based on several factors. According to the CDI, these include the following:
  • Where you live
  • Level of fire protection available in the area
  • Construction type of your home (brick or frame)
  • Type of policy you purchase
  • Amount of coverage you buy

— Lowering Your Premium by Increasing Your Deductible
homeowners policies generally carry a basic deductible of 1 percent ($1,000 on $100,000 of coverage) of the insured value of the dwelling. Deductibles are available as high as 5 percent and as low as $100, although not all companies offer deductibles that low. If you raise your deductible, you’ll have to pay more out of pocket for repairs and replacement costs before your insurance company will begin to pay. For example, purchasing a $250 deductible in lieu of a $100 deductible will mean you will normally pay $150 more out of your pocket at the time of a loss.

   
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