Property Insurance Basics

Correct

The answer is B: The insurer must offer to renew if a disaster caused the total loss and the insured was not also negligent.

Insurance Code §675.1(a)(3) applies to a total loss of the primary insured structure under a residential property policy. If a disaster caused the loss (an earthquake, fire, storm or similar sudden catastrophe for which a state of emergency or local emergency has been declared, as defined by reference to Civil Code §1689.14) and the loss was not also due to the insured's negligence, the insurer must offer to renew for at least the next two annual renewal periods and no less than 24 months of coverage from the date of loss. The renewal adjusts limits, coverages and premium to the insured's changed exposure after consultation (§675.1(a)(1)). The duty gives way to a §676 ground such as nonpayment or fraud, and to later losses that make the property uninsurable. The statute does not require the insured to rebuild on the same parcel.

Reviewed in our October 2026 California fact-check.

Correct

The answer is D: Deduct the value of the land at the new location from the payment.

After a total loss, §2051.5(c) bars a policy from limiting or denying replacement cost because the insured rebuilds or buys a home at a new location. For a residential property policy, §2051.5(c)(2) measures what the insured can recover to rebuild or replace the home elsewhere by what rebuilding at the original location would have cost, and says a deduction for the value of land at the new location is not permitted. The insurer may still cap the payment at the original-location rebuilding cost (including building code upgrade and any extended replacement cost coverage), apply the policy limit (§2051.5(a)(1)), and credit actual cash value already paid (§2051.5(a)(2)). The rule applies to any total loss, not only to declared emergencies.

Reviewed in our October 2026 California fact-check.

Correct

The answer is C: Conditions

Conditions are provisions in the policy that qualify or place limitations on the insurer's promise to pay or the insured's duties. They outline the rights and responsibilities of both parties. Declarations provide specific policy details. The Insuring Agreement states the insurer's promise to pay. Definitions clarify key terms used in the policy.

Reviewed in our October 2026 California fact-check.

Correct

The answer is D: Fire Insurance

Insurance Code §102(a) says fire insurance includes insurance against loss by fire, lightning, windstorm, tornado, or earthquake. Because a kind of insurance may fall in more than one class (§121), lightning, windstorm, tornado and earthquake coverage can also be written as miscellaneous insurance (§120), but only the fire class lists all five perils, fire included. Marine insurance (§103) covers property exposed to transit and transportation perils, and surety insurance guarantees the performance of obligations. Casualty is a market grouping for lines such as liability, not one of the classes listed in §100.

Reviewed in our October 2026 California fact-check.