A dwelling policy for the homes that don't fit.

How a dwelling claim gets measured

Your declarations page says whether a building loss is settled at actual cash value or replacement cost. In California, Insurance Code 2051 and 2051.5 set how each is measured.

• Actual cash value. Under 2051(b), for either a total or partial loss to the structure, the actual cash value recovery is what it would cost to repair, rebuild or replace the damaged property, less a fair and reasonable deduction for physical depreciation based on its condition at the time of the loss, or the limit, whichever is less. Depreciation applies only to components of a structure normally subject to repair and replacement during its useful life.
• Replacement cost. Under 2051.5(a), replacement cost is measured without a deduction for physical depreciation, up to the policy limit. If the policy requires you to repair, rebuild or replace to collect full replacement cost, the insurer pays actual cash value until the work is done, then the difference, up to the limits.
• Time to collect. Under 2051.5(b)(1), a policy can't give you less than 12 months from the first actual cash value payment to collect full replacement cost. Under 2051.5(b)(2), the insurer must grant one or more six-month extensions for good cause if, acting in good faith and with reasonable diligence, you hit delays beyond your control in approval for or reconstruction of the home or residence, such as permit delays or unavailable contractors.
• Rebuilding somewhere else. After a total loss of the insured structure, 2051.5(c)(1) bars a provision that limits or denies building code upgrade or replacement cost payments, to the extent the policy otherwise covers them, because you rebuild or buy at a new location. Payment is capped at the original-location cost, and for residential property policies 2051.5(c)(2) bars a deduction for land value at the new location.

The standard fire policy in Insurance Code 2071 adds two deadlines: a sworn proof of loss is due within 60 days after the loss unless the insurer extends the time in writing, and a suit on the policy must be commenced within 12 months after inception of the loss.

Cancellation and nonrenewal notice rules

California's cancellation and nonrenewal rules for dwelling policies are in Insurance Code 675 through 678. Section 675(a)(1) reaches policies on real property used predominantly for residential purposes with not more than four dwelling units. Its text doesn't require the owner to live there.

• Mid-term cancellation. After a policy has been in effect 60 days, or immediately on a renewal, 676 allows cancellation only for grounds arising after the effective date: nonpayment of premium, the named insured's conviction of a crime that necessarily involves an act increasing an insured hazard, discovery of fraud or material misrepresentation in obtaining the policy or pursuing a claim, discovery of grossly negligent acts or omissions that substantially increase an insured hazard, and physical changes that make the property uninsurable. The 2071 standard fire policy calls for 20 days' written notice of cancellation by the insurer, or 10 days for nonpayment.
• Cancellation notice contents. Under 677, it must be in writing, mailed to the named insured at the policy address or last known address, name the 676 ground relied on, and say you may have a wrongful cancellation reviewed by the Department of Insurance.
• Nonrenewal. Under 678(c), the notice must be delivered or mailed at least 75 days before expiration with the specific reasons. For residential property policies, 678(e) adds a disclosure on the Home Insurance Finder, the California FAIR Plan and Difference in Conditions policies. If the notice is late, the policy stays in effect unchanged for 75 days from the date it is delivered or mailed.
• Renewal offers. Under 678(a), a renewal offer must go out at least 45 days before expiration and identify any reduced limits or eliminated coverage. If it is late, 678(b) keeps the policy in effect for 45 days from the date it is delivered or mailed.
• Pending claims. Section 675(c) bars nonrenewal solely because a claim is pending, except earthquake claims.

A building with five or more units falls outside 675(a)(1). Other states set their own periods; compare Arizona and Colorado, or read California's full notice rules.

Official sources

• Cal. Ins. Code 2051 (actual cash value measure)
• Cal. Ins. Code 2051.5 (replacement cost, time limits, state of emergency, rebuilding elsewhere)
• Cal. Ins. Code 2071 (standard form fire policy: cancellation, proof of loss, suit)
• Cal. Ins. Code 2060 (additional living expenses after a state of emergency)
• Cal. Ins. Code 675 (scope; pending-claim nonrenewal rule)
• Cal. Ins. Code 676 (grounds for cancellation)
• Cal. Ins. Code 677 (cancellation notice contents)
• Cal. Ins. Code 678 (nonrenewal and renewal offer notices)
• California Department of Insurance, Residential Insurance: Homeowners and Renters