Is your dwelling coverage enough to rebuild your California home?

It should pay to rebuild the house from the ground up. The Department of Insurance's homeowners guide says the dwelling limit "should be the amount it would cost to replace your home."

The guide warns that this number can sit far from your home's sale value. Land is part of a sale price, but a home policy generally does not cover land.

California law puts the same idea on your declarations page. Every home policy must say the dwelling limit "is based on an estimate of the cost to rebuild your home."

The dwelling coverage entry in the glossary explains the term. On most policies it is Coverage A.

Often, in the claim data. Kenneth Klein, a law professor, got Department of Insurance claim data through public records requests and published his study in the Lewis & Clark Law Review in 2026.

For 2021 to 2023, 1,189 of 1,667 owner-occupied homes destroyed by fire, about 71%, had less coverage than the insurer-reported cost to rebuild. Klein counted any extended replacement cost as coverage. Among the homes that came up short, the average shortfall was about 19%.

His study also found that homeowners "rarely choose to underinsure." In his reading of the 2018 to 2023 data, at least 82% of the homeowners in it bought policies they believed fully covered the home.

Survivors of the January 2025 Los Angeles fires report the same problem. In a survey of 675 fire-hit households taken in early 2026, United Policyholders asked owners of lost homes whether their insurance would cover the rebuild.

Of those total-loss respondents, 69% said no, 7% said yes, and 24% did not yet know. United Policyholders is a nonprofit that advises disaster survivors.

Usually, every other year. Since July 1, 2019, Insurance Code section 10103.4 has covered insurers that sell replacement cost coverage. With the renewal offer, they must "provide an estimate of the cost necessary to rebuild or replace the insured structure."

Until January 1, 2028, the law skips the estimate in two cases. One is a limit you raised at your own request within two years. The other is an insurer that indexes your renewal limit to local building costs and lets you ask for a fresh estimate every other year.

Whenever an insurer or agent tells you an estimate for a replacement cost policy, the Department's rules require a copy. The copy must list the cost of each part and the facts it assumed about your home.

The estimate cannot be based on the land's resale value or your loan, and it cannot take off anything for wear and age.

You still choose the limit. The law lets you and your insurer agree on a limit above or below the estimate. The FAIR Plan's policy calls it "your sole responsibility to select and maintain adequate amounts" of insurance.

From January 1, 2028, SB 876 removes both exceptions. Every insurer that sells replacement cost coverage must then send the estimate with the renewal offer every other year.

The FAIR Plan joins the rule on that date too, for its replacement cost policies written below its top combined limit.

And every home eligible for replacement cost must get a priced offer of extended replacement cost, adding 50% or more above the dwelling limit. What SB 876 requires covers the rest of the law and its dates.

A few policy terms decide how far your coverage stretches. California's required disclosure form defines most of them, and the replacement cost entry explains the basics.

Extended replacement cost adds a cushion above the dwelling limit, set as a percentage or a dollar amount. Ask what percentage your policy adds, if any.

Building code upgrade coverage pays to meet current codes. California requires a replacement cost home policy to add at least 10% of the dwelling limit for it, on top of that limit.

Watch the 80% line, too. Under the model homeowners form, if your limit is under 80% of the full cost to rebuild, even a partial loss can be paid at a reduced share. The FAIR Plan's policy has the same rule, so check how your own policy settles a partial loss.

After a declared disaster, California lets you combine your dwelling and other structures limits to rebuild the house, if the dwelling limit alone falls short (section 10103.7).

Start with the estimate your insurer used, and check what went into it. The Department's rules list what a California estimate must include. Its guide suggests asking local general contractors "what the current price per square foot is for a home similar to your own."

If you ask in writing to change the limit and the insurer refuses, the guide says to contact the Department for help. Before you ask, check these items in the estimate:

• The square footage of the living space, the number of stories and any tall or unusual wall heights.
• The foundation, frame, roof and siding, and whether the home sits on a slope.
• Kitchen, bath, flooring and heating finishes, which the estimate must account for.
• When the home was built, plus the size and type of any attached garage.
• Labor, materials, overhead and profit, demolition and debris removal, permits and architect's plans.
• Any addition or remodel since the estimate was made, reported to your insurer in writing.