California Department of Insurance

What this document is

California Department of Insurance - Residential Insurance: Homeowners and Renters (Form 401 Revised January 2026) is a reference published by California Department of Insurance (www.insurance.ca.gov). It is one of the California documents that insurance license exam questions are written from, including california property & casualty, california personal lines, california claims adjuster practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

• California Department of Insurance, Residential Insurance: Homeowners and Renters (Form 401), Will My Policy Completely and Totally Replace My Home

  “(1) in case of total loss to the structure, the policy limit or the fair market value of the structure, whichever is less, or (2) in case of a partial loss to the structure, the amount it would cost the insured to repair, rebuild, or replace less a fair and reasonable deduction for physical...”

• California Department of Insurance, Residential Insurance: Homeowners and Renters (Form 401), What Limits Should I Set on My Policy (Contents limit)

  “The limited coverage amounts for specific types of personal property are not separate limits in addition to the contents limit. These limits are included in the overall contents limit and represent the maximum paid out for that specific type of personal property.”

• California Department of Insurance, Residential Insurance: Homeowners and Renters (Form 401), Coverage F, Medical Payments to Others

  “For example, if a neighbor’s child is injured while playing in your home, the medical payments portion of your homeowners policy may pay for necessary medical expenses. Medical payments coverage does not apply to your injuries or injuries of those who reside in your household. It is not a...”

• California Department of Insurance, Residential Insurance: Homeowners and Renters (Form 401, revised January 2026), Consumer legislation, Assembly Bill 2962 (2004)

  “This law prohibits insurers from canceling a policy between renewal periods while a home is being rebuilt, except in cases of fraud and misrepresentation. It also prohibits insurers from using the fact that the primary insured structure is damaged as a result of the total loss, as the sole basis for canceling a policy.”

• California Department of Insurance, Residential Insurance: Homeowners and Renters (Form 401, revised January 2026), Perils generally not covered, earthquake

  “When an insurer writes your homeowners coverage, the insurer is legally obligated to offer you 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).”

• CDI, Residential Insurance: Homeowners and Renters, Form 401 (Will My Policy Completely and Totally Replace My Home If It Is Destroyed?)

  “A policy cannot be sold as a “guaranteed replacement cost” policy unless it will pay to completely rebuild the home regardless of the coverage limit. Other types of replacement cost policies will pay your policy limits, plus a certain percentage above those limits.”

• CDI, Residential Insurance: Homeowners and Renters, Form 401 (What Limits Should I Set on My Policy?)

  “The “dwelling” limit should be the amount it would cost to replace your home. This may have nothing to do with the purchase price or the current market value of your home, as homeowners insurance does not generally cover the value of the land upon which your dwelling sits.”

• CDI, Residential Insurance: Homeowners and Renters, Form 401 (Home Protection Contracts)

  “Home protection contracts don't overlap or replace the homeowners insurance policy. For example, if your hot water heater burst and destroyed a wall in your home, the warranty would repair the water heater and your insurance would pay to fix the wall and any floor damage.”

• CDI, Residential Insurance: Homeowners and Renters, Form 401 (What are Your Rights?, Refunds)

  “In general, whenever the policyholder initiates a cancellation, the premium is calculated on a short rate basis whereby the company retains part of the unearned premium to cover administrative expenses. However, some companies may calculate the premium on a pro rata basis.”

• CDI, Residential Insurance: Homeowners and Renters, Form 401 (Problems in Obtaining Insurance)

  “The FAIR Plan offers a standard fire insurance policy for both the structure and contents. This is a basic property policy that has coverage limitations. No coverage is provided for liability or coverage for other perils such as burglary.”

• CDI Form 401 (rev. Jan 2026), Coverage E, Personal Liability

  “This section of the homeowners policy will provide coverage in the event you or a resident of your household are legally responsible for injury to others. Coverage E normally provides a defense and will pay damages, as the insurance company deems appropriate. There are some exceptions. The...”

• CDI Form 401 (rev. Jan 2026), Coverage B, Other Structures

  “This coverage provides protections to other structures on the residence premises that are not attached to the dwelling. Items covered include detached garages, tool sheds, etc. Coverage B is normally limited to 10% of the coverage A limit. However, you may purchase more coverage for an additional premium.”

Practice this material

Questions about this source

More California sources

• California Accident and Health Agent Examination Educational ObjectivesCandidate handbook or exam outline
• California Casualty License Examination ObjectivesCandidate handbook or exam outline
• California Life-Only Agent Examination Educational ObjectivesCandidate handbook or exam outline
• California Personal Lines License Examination ObjectivesCandidate handbook or exam outline
• California Property License Examination ObjectivesCandidate handbook or exam outline
• Cal. Ins. Code s. 790.03: Unfair methods of competition and unfair or deceptive acts definedState statute
• Cal. Ins. Code s. 1668: Grounds for license denial, suspension, or revocationState statute
• Cal. Ins. Code ss. 10350.2-10350.3: Individual disability policy required provisionsState statute