10 Things Every California Homeowner Should Know Before a Loss

The worst time to learn how your insurance works is after something goes wrong. Most homeowners never look at their policy until they have water pouring through the ceiling or ash falling on their property. By then, the questions come fast and the answers are expensive. This article gives you the ten things you need to know right now — while things are calm.

1. Read Your Declarations Page

Your declarations page — the "dec page" — is a one- or two-page summary of your entire policy. It lists your coverage limits, your deductible, your endorsements, and your policy period. It is the single document that makes your policy specific to you. If you have never read it, you do not actually know what you are covered for. Find it. Read it. Keep a copy somewhere outside your home — in your email, in cloud storage, or with a family member.

For a section-by-section walkthrough, see our guide on how to read your declarations page.

2. Photograph Everything You Own

If your home is destroyed, you will need to prove what you owned. That means every room, every closet, every drawer, every shelf. Walk through your home with your phone recording video. Open cabinets. Pull out drawers. Narrate as you go: "Kitchen — KitchenAid mixer, Vitamix blender, set of All-Clad pots." This takes 30 minutes and can be worth tens of thousands of dollars in a total loss.

Store the video in the cloud — Google Drive, iCloud, Dropbox — anywhere that survives if your home does not. Update it once a year, especially after major purchases.

3. Know Your Coverage Limits

Your policy has separate limits for different categories: dwelling (Coverage A), other structures (Coverage B), personal property (Coverage C), and loss of use (Coverage D). Each one is a ceiling — the maximum the insurer will pay for that category. You need to know these numbers. If your dwelling limit is $400,000 but rebuilding your home would cost $650,000, you have a serious problem that needs to be fixed before a loss occurs, not after.

4. Understand Your Deductible

Your deductible is the amount you pay out of pocket before insurance kicks in. Most homeowners know they have a deductible. Fewer know the exact amount. And many do not realize that some policies have different deductibles for different perils. A policy might have a $1,000 deductible for most losses but a separate, higher deductible for windstorm or earthquake.

5. Check for Percentage Deductibles

This is where many homeowners get blindsided. A "percentage deductible" is not a fixed dollar amount — it is a percentage of your dwelling limit. A 5 percent earthquake deductible on a $600,000 home means you pay the first $30,000 out of pocket. Some wildfire policies and California FAIR Plan policies use percentage deductibles too. Check your dec page carefully. If you see any deductible expressed as a percentage, do the math now so you are not shocked later.

6. Update Your Contents List Annually

Your belongings change every year. You buy furniture. You receive gifts. You upgrade electronics. A contents inventory from five years ago is incomplete. Set a calendar reminder to update your home inventory every year — perhaps when you change your clocks or file your taxes. Include descriptions, approximate values, and photographs or receipts where possible.

Under California law (10 CCR §2695.5(e)(2)), the insurer must provide you with forms for listing personal property within 15 calendar days of receiving notice of the claim. But do not wait for a loss to start the list. Build it now.

7. Know Your ALE Limit

ALE stands for Additional Living Expenses — also called "loss of use" or Coverage D. This is the money your insurer pays for temporary housing, meals, and other increased costs while your home is being repaired or rebuilt. In California, most policies provide ALE as a percentage of Coverage A (often 20-30 percent) or for a specific time period.

Know your limit and know whether it is capped by time, by dollar amount, or both. If your home needs a year of reconstruction and your ALE limit runs out in six months, you will be paying out of pocket for the remaining time. For more detail, see our guide on how a California claim works.

8. Have a Mitigation Plan

When damage happens, you have a duty to mitigate — to prevent further damage. If a pipe bursts, you need to shut off the water. If a tree falls through the roof, you need to tarp it. If there is smoke intrusion, you need to ventilate. Think about what you would do in common scenarios. Know where your main water shutoff is. Know where your electrical panel is. Have tarps, a shop vac, and basic tools accessible.

The insurer is required to pay for reasonable mitigation costs. But you have to act — and act quickly. Failing to mitigate can give the insurer grounds to deny part of your claim for the resulting additional damage.

9. Keep Contractor Contacts Ready

After a major loss, good contractors are booked immediately. After a catastrophe like a wildfire or widespread storm, they are booked for months. Having a relationship with a licensed general contractor before a loss gives you a massive head start. You want someone who can provide a repair estimate, perform emergency board-ups or tarping, and eventually do the rebuild.

Also keep contacts for a water mitigation company, a plumber, an electrician, and a roofer. You do not want to be Googling these at midnight with water coming through your ceiling.

10. Understand the Claims Process Before You Need It

The insurance claims process has specific steps, specific deadlines, and specific rules. In California, an insurer must acknowledge your claim within 15 days and accept or deny it within 40 days (Cal. Code Regs., tit. 10, Section 2695.7). You have the right to choose your own contractor. You have the right to disagree with the insurer's estimate. You can invoke appraisal if you dispute the amount. These are rights that you lose if you do not know about them.

Read our overview of how a California homeowner claim works before you ever need to file one. Understanding what homeowners insurance actually covers — and what it does not — will put you ahead of 90 percent of policyholders.

The Bottom Line

Insurance is a contract you pay for every month. You deserve to know what that contract says and how it works. The ten steps above take a few hours total. They can save you weeks of frustration and tens of thousands of dollars when something goes wrong. Do not wait for a loss to read your policy. Do it now.

This article is for informational purposes only and does not constitute legal advice. Insurance policies and applicable law vary by state and by policy form. Consult with a licensed professional regarding your specific situation.