California Landlord Insurance Glossary

The value of damaged property calculated as replacement cost minus depreciation. ACV coverage pays less than replacement cost coverage — a 15-year-old roof that costs $25,000 to replace might be valued at $10,000 ACV after depreciation is applied. For California landlords, ACV coverage on the dwelling creates a gap between the claim payment and actual rebuild cost. Always verify whether your policy pays ACV or RCV.

A person or entity — other than the named policyholder — who is added to a liability policy and given coverage protection. California landlords are frequently required by lenders or property managers to add them as additional insureds on the landlord liability policy. Being named as an additional insured means that party is protected by the policy for covered liability claims arising from the insured property.

An insurance company that is licensed by the California Department of Insurance to write policies in the state. Admitted carriers must have their rates and policy forms approved by the CDI, and policyholders are protected by the California Insurance Guarantee Association (CIGA) if the carrier becomes insolvent. Most major national carriers are admitted. Many have restricted or exited the California market since 2022.

A publicly managed, privately funded insurer that provides residential earthquake insurance in California through participating insurance companies. The CEA is the largest residential earthquake insurer in the country. Earthquake policies through the CEA cover the dwelling, personal property, additional living expenses, and emergency repairs. Only 12 percent of California property owners currently carry earthquake insurance, making CEA coverage a significant underutilized protection.

A one-page summary document that provides evidence of insurance coverage — carrier name, policy number, effective dates, coverage types, and limits. Certificates of insurance are commonly requested by lenders, property managers, contractors, and others who need proof that a landlord's property is insured. A certificate does not modify or extend coverage — it only documents what exists in the underlying policy.

A liability policy form that covers claims reported during the policy period, regardless of when the underlying incident occurred. This is the opposite of an occurrence form. Claims-made policies are common in professional liability and some specialty lines. If a claims-made policy is cancelled or not renewed, a reporting endorsement (tail coverage) is needed to cover claims that arise after the policy ends for incidents that occurred while it was active.

The amount the policyholder pays out of pocket before the insurance policy begins to pay a covered claim. A $5,000 deductible means the first $5,000 of every covered loss comes from the landlord's own funds. Higher deductibles typically result in lower premiums. California wildfire policies — including FAIR Plan and surplus lines policies — often carry separate, higher deductibles for wildfire-specific losses, sometimes expressed as a percentage of the insured value rather than a flat dollar amount.

A policy that fills the coverage gaps left by a primary policy — most commonly used alongside the California FAIR Plan. A DIC policy adds the perils and coverage lines the FAIR Plan excludes: liability, water damage from burst pipes, theft and vandalism, and loss of rental income. Together, a FAIR Plan plus a properly structured DIC policy approximates the coverage of a traditional DP-3 landlord policy. DIC premiums for an SFR typically run $800 to $2,500 per year.

The standard insurance policy form for non-owner-occupied residential rental properties in California. Written on an open-perils basis — all perils are covered unless specifically excluded — the DP-3 is designed for landlords renting to tenants. It can be endorsed for premises liability and loss of rents. The DP-3 is the correct policy form for any California rental property where a tenant, rather than the owner, occupies the dwelling. Using an HO-3 instead creates claim denial risk.

A separate insurance policy covering damage caused by seismic events — excluded from all standard landlord policies and from the FAIR Plan. Available through the California Earthquake Authority (CEA) or private market carriers. Earthquake coverage for rental properties typically covers the dwelling structure, loss of rents, and additional living expense. Given that California sits on multiple major fault systems and only 12 percent of property owners carry earthquake coverage, this is one of the most significant underinsurance gaps in the state.

The segment of the insurance market consisting of non-admitted carriers that can write risks the admitted market won't insure. The E&S market operates without California's rate and form approval requirements, giving carriers flexibility to price and cover risks — including wildfire-exposed California rental properties — that admitted carriers have exited. Carriers include Lloyd's of London syndicates, Scottsdale Insurance, and others. E&S placements do not carry California Insurance Guarantee Association protection.

The California Fair Access to Insurance Requirements Plan — the state's mandatory insurer of last resort, created in 1968. All admitted California carriers are required to participate. The FAIR Plan provides basic fire coverage for properties that cannot obtain private market insurance. It does not cover liability, water damage, theft, loss of rents, or earthquake. As of December 2025, the FAIR Plan had 668,609 policies — 146 percent growth since 2022. Rates are increasing 29.1 percent effective October 2026.

The standard homeowners insurance policy for owner-occupants — the person who lives in the insured home. HO-3 policies assume the policyholder resides in the dwelling and are not designed for rental use. Using an HO-3 on a property rented to tenants creates a policy form mismatch: if a claim occurs while a tenant is occupying the property, the carrier can deny it on the basis that the policy's occupancy requirements were not met. California landlords on HO-3 forms for rental properties should convert to DP-3 immediately.

An insurance coverage that replaces rental income lost when a property becomes uninhabitable due to a covered loss. If fire or another covered peril renders your rental property uninhabitable for 18 months during repair, loss of rents coverage pays your monthly rental income for up to the coverage period (typically 12 or 24 months). Coverage limits should equal at least one year — and preferably two years — of gross rental income. The FAIR Plan does not include loss of rents; it must be added through a DIC or DP-3 endorsement.

A liability policy form that covers claims arising from incidents that occur during the policy period, regardless of when the claim is actually filed. If someone is injured on your property during the policy period and files a lawsuit three years later after the policy has expired, an occurrence form policy still covers the claim. Most landlord liability policies are written on an occurrence form. This is generally preferable to a claims-made form for premises liability coverage.

Coverage that pays the additional cost of rebuilding damaged property to comply with current building codes, beyond what it would cost to simply restore the structure to its pre-loss condition. California building codes have been updated substantially since most older rental properties were built — requiring upgraded electrical, plumbing, fire suppression, seismic bracing, and accessibility features in any rebuilt or significantly repaired structure. Without this coverage, the code-upgrade cost during a repair or rebuild is entirely the owner's out-of-pocket expense.

The cost to repair or rebuild damaged property using materials of like kind and quality at current construction costs, with no deduction for depreciation. RCV coverage is essential for California landlords because construction costs have risen dramatically since 2020 — post-wildfire rebuilds in many California markets are running $400 to $600 or more per square foot. A policy that pays replacement cost ensures you receive enough to actually rebuild, not just the depreciated value of what was lost.

Insurance placed with non-admitted carriers through licensed surplus lines brokers. Surplus lines carriers are not subject to California's rate and form approval requirements, allowing them to write risks that admitted carriers won't — including wildfire-exposed rental properties in ZIP codes where admitted carriers have exited. Surplus lines placements are not backed by the California Insurance Guarantee Association. California's Surplus Lines Association (CSLA) oversees compliance and registration in the state.

A liability policy that provides coverage above and beyond the limits of an underlying landlord policy, typically in increments of $1 million. If a tenant receives a $1 million judgment for an injury on your property and your landlord policy only has $300,000 in liability coverage, an umbrella pays the remaining $700,000 up to its limit. Personal umbrellas typically cost $200 to $600 per year for $1 million to $5 million in coverage — a cost-effective way to protect significant personal assets from landlord liability claims.

A standard provision in most landlord policies that reduces or suspends coverage when the property has been vacant for a specified period — typically 30 to 60 consecutive days. After the vacancy threshold is crossed, covered perils may be limited to fire only, or the policy may lapse entirely. Landlords who have a property between tenants or undergoing renovation should notify their broker immediately and arrange a vacancy endorsement or separate vacant property policy to maintain adequate coverage during the vacancy period.