Homeowners Insurance

Course of Construction Insurance

Protecting Your Most Valuable Asset and Your Financial Future

Your home represents more than shelter—it’s likely your largest financial asset and the foundation of your family’s security. Yet homeownership and property management create substantial liability exposures that extend far beyond the property itself. Whether you own a primary residence, investment property, vacant land, or rent your home to others, you face risks that can threaten your personal wealth and future earnings.

Why Specialized Homeowners Liability Coverage Matters

Standard homeowners insurance policies are designed for owner-occupied primary residences. The moment your situation changes—you rent out your home, leave it vacant during renovations, purchase a condo with unique liability considerations, become a landlord, or list your property on Airbnb—your coverage needs change dramatically. Using the wrong policy type or lacking appropriate endorsements can leave you completely unprotected when claims arise.

The California Context:

California’s liability environment creates heightened exposure for property owners. Strict premises liability laws hold owners responsible for injuries occurring on their property, even when caused by others. Wildfire risks in many regions create potential liability for vegetation management failures. Rent control laws and tenant protection ordinances make evictions complex and costly. Short-term rental regulations vary by municipality, creating compliance challenges that generate liability exposure.

Defense costs alone can devastate unprepared property owners. A slip-and-fall lawsuit, even if baseless, typically costs $50,000 to $150,000 to defend. Property damage claims from water leaks, fire, or construction defects often exceed $100,000. And California juries are known for substantial verdicts when they find property owners negligent.

Understanding Your Homeowners Liability Needs

Different property uses create distinct liability exposures requiring specialized coverage. A condo owner faces different risks than a landlord, who faces different exposures than someone building a custom home. Understanding which coverage applies to your situation is essential for adequate protection.

The Six Essential Product Lines:

Homeowners liability protection encompasses six specialized coverage types, each designed for specific property ownership and use scenarios. Selecting the right coverage—or combination of coverages—ensures you’re protected against the unique risks your property situation creates.

Condo Insurance (HO-6)

Personal property (furniture, electronics, clothing, valuables)
Interior improvements and upgrades (flooring, cabinets, fixtures)
Loss assessment coverage for association-levied charges after covered losses
Personal liability for injuries in your unit or caused by you elsewhere
Additional living expenses if your unit becomes uninhabitable
Water damage originating from your unit affecting neighbors

All Condo Unit Owners: Whether primary residence or investment property
Condo Owners with Upgrades: Premium finishes increase replacement costs beyond basic coverage
Condo Board Members: Face additional liability from governance decisions
Condo Investors: Rental activity increases liability exposure
Luxury Condo Owners: High-value contents require appropriate limits

California's Davis-Stirling Act governs condo associations and creates complex relationships between master policies and individual unit coverage. Understanding where the association's coverage ends and yours begins is critical. Many associations have "bare walls-in" master policies, meaning you're responsible for everything from the drywall inward. Water damage claims are particularly common in California condos and can trigger both your liability and the association's, making proper coverage coordination essential.

Water Damage to Multiple Units: A condo owner's washing machine supply line burst while they were at work, flooding their unit and damaging two units below. The claim totaled $95,000 for repairs to all three units plus temporary housing for displaced residents. The owner's HO-6 liability coverage and loss assessment coverage responded to the full amount.
Special Assessment After Building Damage: A condo association's master policy had a $25,000 per-unit deductible following a fire that damaged the building's exterior. Each of 40 owners received a $25,000 special assessment. Owners with loss assessment coverage had this expense covered; those without paid out-of-pocket.

What's the difference between the association's master policy and my HO-6?

The master policy covers the building structure, common areas, and association liability. Your HO-6 covers your personal property, improvements within your unit, your personal liability, and fills gaps in the master policy through loss assessment coverage.

How much loss assessment coverage do I need?

Review your association’s master policy deductible and coverage limits. If the master policy has a $10,000 per-unit deductible, you need at least that much loss assessment coverage. Many experts recommend $50,000 to $100,000 given potential earthquake, flood, or catastrophic loss scenarios.

Are improvements and upgrades covered?

Yes, but you must declare them and carry adequate coverage limits. Standard HO-6 policies provide $5,000 to $10,000 for improvements—insufficient if you’ve installed premium flooring, custom cabinets, or high-end fixtures. Schedule these improvements for proper coverage.

Does my HO-6 cover me if someone is injured in the common area?

Your liability coverage applies if you’re personally responsible for the injury, even in common areas. For example, if your dog bites someone in the hallway, your policy responds. Injuries not attributable to a specific unit owner fall under the association’s master policy.

Review the Master Policy - Understand what the association covers and identify your coverage responsibilities
Document Improvements - Photograph and list any upgrades to your unit for proper coverage limits
Evaluate Loss Assessment Limits - Ensure adequate coverage based on the master policy's deductibles and potential gap exposures

Renters Insurance (HO-4)

Personal property from theft, fire, water damage, and other covered perils
Personal liability for injuries to others or damage to others' property
Additional living expenses if the rental becomes uninhabitable
Guest medical payments for minor injuries regardless of fault
Damage to the landlord's property caused by tenant negligence
Off-premises coverage for belongings stolen from cars or elsewhere

All Tenants: Renters at any income level benefit from protection
Students in Off-Campus Housing: Often required by landlords or universities
Tenants with Valuable Possessions: Electronics, jewelry, and furniture add up quickly
Pet Owners: Dog bites and pet damage create significant liability
Roommate Situations: Shared liability makes individual coverage important
Tenants in Wildfire or Flood Zones: Additional living expenses coverage is critical

California's tenant-friendly laws mean renters are often protected from eviction for minor issues, but they remain liable for significant damage to the rental property. Tenants can be sued for negligent property damage, fire damage from unattended candles or cooking, or water damage from overflowing tubs or aquariums. Many California landlords now require proof of renters insurance before lease signing. Given the state's high cost of living, temporary housing expenses during displacement can quickly exceed $5,000 to $10,000 per month in urban areas.

Kitchen Fire Damage: A tenant left food cooking unattended, causing a fire that damaged their unit and the one above it. The landlord's insurance paid for repairs but subrogated against the tenant for $85,000. The tenant's renters insurance covered the claim, protecting them from bankruptcy.
Theft of Personal Property: A tenant's apartment was burglarized, with thieves stealing electronics, jewelry, and clothing worth $18,000. Renters insurance covered the replacement value minus the deductible, allowing the tenant to replace essential items and continue working (laptop and work equipment were stolen).

Isn't my stuff covered by my landlord's insurance?

No. Landlord insurance covers only the building structure and the landlord’s liability. Your belongings and your personal liability require your own renters policy. If you cause damage to the rental property, the landlord’s insurance may pay repairs then subrogate against you.

How much personal property coverage do I need?

Inventory your belongings—most people underestimate their value. Include clothing, electronics, furniture, kitchen items, and sports equipment. Most California renters need $30,000 to $75,000 in coverage. Replacement cost coverage (versus actual cash value) is worth the small premium increase.

Does renters insurance cover my roommate's belongings?

No, each roommate needs their own policy. Your policy covers only your property. If you’re both on the lease and one causes damage, liability may be shared, making individual policies even more important.

Are expensive items like jewelry and bikes fully covered?

Standard policies have sublimits for certain property categories—often $1,500 for jewelry, $2,500 for electronics per item, and $1,000 for bikes. Schedule valuable items separately with endorsements for full replacement coverage.

Inventory Your Belongings - Document what you own with photos and estimated values
Determine Appropriate Limits - Add up replacement costs for major categories: furniture, electronics, clothing, kitchenware
Consider Replacement Cost Coverage - Pays to replace items at current prices rather than depreciated value

Vacant Property Insurance

Property damage from fire, windstorm, hail, and other covered perils
Vandalism and malicious mischief (often with limitations)
Theft of building materials and fixtures
Liability for injuries occurring on the property
Limited water damage coverage (often excluding frozen pipes)
Coverage during renovation or construction periods

Homeowners During Major Renovations: Especially if moving out during construction
Properties Between Tenants: Landlords with temporarily vacant rentals
Homes Pending Sale: Extended marketing periods create vacancy exposure
Estate Properties: Homes in probate awaiting distribution or sale
Second Homes Not Yet Furnished: Property purchased but not yet occupied
Foreclosure Properties: Banks and lenders acquiring properties through foreclosure

California's wildfire risk makes vacant property insurance more expensive and harder to obtain, particularly in high-risk zones. Insurers worry that vacant properties won't be monitored for nearby fire threats or evacuation orders. Water damage from burst pipes—less common in California than cold climates—is still a concern, particularly in mountain properties. Squatters and trespassers are increasingly common in California's urban areas, creating both property damage and liability exposure for owners of vacant homes.

Vandalism During Renovation: A home under renovation was vandalized when thieves broke in and stripped copper pipes, wiring, and fixtures, causing $45,000 in damage. The vacant property policy covered the theft and resulting water damage from severed pipes, minus the deductible.
Fire in Vacant Estate Property: A home vacant for six months during estate settlement suffered a kitchen fire from faulty wiring, causing $180,000 in damage. Because the heirs had vacant property coverage rather than relying on the deceased's expired homeowners policy, the claim was covered.

When does my regular homeowners policy stop covering vacancy?

Most policies exclude coverage or limit it significantly after 30 to 60 consecutive days of vacancy. Some policies define “vacancy” as both unoccupied AND unfurnished, while others trigger based on lack of occupancy alone. Review your policy’s specific vacancy clause.

What's the difference between vacant and unoccupied?

Vacant means the home is both empty of people AND empty of furnishings/belongings. Unoccupied means no one is living there but furniture and belongings remain. Vacant properties face stricter coverage limitations because they’re perceived as higher risk.

Is water damage covered on vacant properties?

Coverage is often limited or excluded, particularly for frozen pipe damage. Some insurers offer water damage coverage if you winterize the property and drain pipes. California properties face less frozen pipe risk but should still maintain heat and regular inspections.

Can I get vacant property insurance for more than a year?

Most vacant property policies are written for 6 to 12 months. Extended vacancy increases risk and insurers may require property inspections, additional security measures, or higher premiums for renewal beyond one year.

Notify Your Insurer Immediately - Don't let your standard homeowners policy lapse into non-coverage due to undisclosed vacancy
Document Property Condition - Photograph the property before vacancy begins for claims documentation
Implement Risk Reduction - Regular inspections, security systems, and property maintenance may reduce premiums and improve coverage availability

Landlord Protection Insurance (DP-3)

Dwelling coverage for the building structure
Loss of rental income if the property becomes uninhabitable
Liability coverage for tenant and visitor injuries
Property damage caused by tenant negligence (above security deposit)
Legal expenses for tenant disputes and evictions
Coverage for landlord-owned appliances and systems
Vandalism and malicious mischief by tenants or others

All Landlords: Single-family rentals, multi-unit properties, converted primary residences
Vacation Rental Owners: Properties rented seasonally or periodically
Property Investors: Real estate investment portfolio properties
Accidental Landlords: Homeowners unable to sell who rent temporarily
Family Property Rentals: Homes rented to relatives or friends still need proper coverage
Fix-and-Flip Investors: Properties held temporarily between renovation and sale

California's tenant protection laws make landlord-tenant disputes more complex and costly. Strict habitability requirements mean landlords can face liability for property conditions that wouldn't trigger exposure in other states. COVID-19 eviction moratoriums highlighted the importance of loss of rent coverage when properties become legally non-rentable. California's fair housing laws create additional discrimination claim exposure requiring robust liability coverage. Rent control in many municipalities limits income recovery, making loss of rental income coverage even more critical.

Tenant Fire Damage: A tenant's unattended candle caused a fire resulting in $120,000 damage to the rental property. The landlord's dwelling policy covered the repairs. Loss of rent coverage paid $18,000 (six months at $3,000/month) while the property was uninhabitable and being repaired.
Slip and Fall Injury: A tenant's guest fell on an exterior stairway with a loose handrail, suffering injuries requiring surgery. The guest sued the landlord for $250,000. Landlord liability insurance covered the $175,000 settlement and $65,000 in legal defense costs.

What's the difference between landlord insurance and homeowners insurance?

Homeowners insurance assumes you occupy the property and have direct control. Landlord insurance accounts for tenant occupancy, includes loss of rent coverage, provides higher liability limits for tenant/guest injuries, and covers tenant-caused damage beyond normal wear and tear.

Does landlord insurance cover my tenant's belongings?

No. Landlord insurance covers only the building structure, systems, and landlord-owned property. Tenants need their own renters insurance for their personal property. However, you may face liability if your negligence (like failing to fix a roof leak) damages their belongings.

Is loss of rent coverage worth it?

Absolutely, especially in California where evictions are difficult and habitability standards are strict. If your property becomes uninhabitable due to fire, water damage, or other covered loss, loss of rent coverage replaces your income during repairs—often for 6-12 months.

Can I insure a property I'm actively renovating before renting?

Properties under significant renovation typically require course of construction insurance rather than standard landlord coverage. Once renovations complete and you secure a tenant, transition to landlord insurance.

Does my policy cover short-term rentals like Airbnb?

No. Standard landlord policies exclude or severely restrict short-term rental activity. If you rent your property on Airbnb, VRBO, or similar platforms, you need specialized short-term rental insurance. Failing to disclose this use voids coverage.

Transition from Homeowners to Landlord Coverage - Notify your insurer immediately when converting your home to a rental
Determine Appropriate Coverage Limits - Ensure dwelling coverage reflects replacement cost and loss of rent coverage matches your monthly rental income
Review Liability Limits - Consider $500,000 to $1 million in liability coverage given California's litigation environment

Course of Construction Insurance (Builders Risk)

Materials at the job site (stored or installed)
Work in progress and partially completed structures
Temporary structures and job site equipment
Theft of building materials and tools
Fire, windstorm, vandalism, and other covered perils
Soft costs (architect fees, loan interest) during construction delays
Debris removal after covered losses

New Home Builders: Custom home construction projects
Major Renovation Projects: Adding significant square footage or rebuilding
Commercial Property Developers: Office buildings, retail centers, industrial facilities
General Contractors: May be required by contract to provide builders risk
Property Owners Acting as Owner-Builder: Particularly when construction loans are involved
Lenders: Often require builders risk as a loan condition

California's strict building codes and seismic requirements make construction projects more complex and expensive, increasing the importance of adequate coverage. Wildfire risk in many regions creates exposure during construction—partially built structures are vulnerable and difficult to protect during evacuations. Theft of copper, tools, and materials is particularly common in California's urban areas. Many California municipalities have specific permitting requirements that can delay projects, making soft cost coverage valuable. The state's liability environment also means construction defect claims are common, though these require separate coverage beyond builders risk.

Fire During Framing: A custom home under construction suffered fire damage when electrical work sparked a blaze, destroying $380,000 in framing, materials, and completed work. Builders risk insurance covered the reconstruction costs, allowing the project to continue without the owner depleting savings.
Material Theft: Thieves stole $65,000 in copper wiring, plumbing fixtures, and appliances from a job site over a weekend. Builders risk coverage paid to replace the stolen materials and compensated for the two-week construction delay while waiting for replacement items.

Who should purchase builders risk—the owner or contractor?

Either can purchase it, but the policy should name all parties with a financial interest: owner, contractor, subcontractors, and lender. Loan agreements typically specify who must provide coverage. Contractors often have annual builders risk policies covering multiple projects.

Does builders risk cover my existing home during an addition?

Standard homeowners insurance typically covers your existing structure, while builders risk covers the addition/renovation. However, during major renovations, you may need to modify your homeowners policy or add renovation coverage. Clarify which policy covers what before work begins.

What's not covered by builders risk?

Common exclusions include: earth movement (earthquakes require separate coverage), flood (separate flood policy needed), employee theft by the owner’s own employees, testing and commissioning failures, design errors, and faulty workmanship (though resulting damage may be covered).

How long does builders risk coverage last?

Policies typically run for the estimated construction period plus a buffer—often 12-18 months. Coverage automatically terminates when construction completes, the property is occupied, or the policy period expires. Extensions are available if construction runs long.

Obtain Accurate Project Costs - Coverage should equal total project value including materials, labor, and soft costs
Understand Who's Responsible - Review construction contracts to clarify insurance obligations
Coordinate with Existing Policies - Ensure no gaps between your homeowners (if applicable), builders risk, and contractor's insurance

Short-Term Rental Insurance

Property damage from guest negligence or accidents
Guest injury liability occurring on the premises
Loss of rental income from covered property damage
Theft or damage to furnishings, electronics, and décor
Guest property damage to neighboring properties
Liquor liability (if you provide alcohol)
Business interruption during repairs

All Airbnb/VRBO Hosts: Whether renting occasionally or full-time
Vacation Home Owners: Properties rented seasonally to travelers
Bed & Breakfast Operators: Even small B&Bs need specialized coverage
Urban Short-Term Rentals: City apartments rented by the night or week
Property Management Companies: Managing short-term rentals for multiple owners
Homeowners Renting During Vacations: Even occasional rental creates exposure

California cities have vastly different short-term rental regulations—some ban them entirely, others require business licenses, and regulations change frequently. San Francisco, Los Angeles, San Diego, and other cities impose strict registration, occupancy limits, and tax collection requirements. Violating local ordinances can void insurance coverage entirely. California's strict liability laws mean hosts face exposure for guest injuries even without negligence. Noise complaints and neighbor disputes are common in dense urban areas, potentially triggering nuisance claims. Many California HOAs and condo associations prohibit short-term rentals, creating additional compliance issues.

Guest Injury at Pool: A short-term rental guest dove into a pool marked "No Diving" and suffered a spinal injury requiring $450,000 in medical care. The guest sued the property owner for inadequate warnings. Short-term rental liability coverage defended the suit and paid the $280,000 settlement.
Party Damage: Guests threw an unauthorized party causing $35,000 in damage—broken furniture, holes in walls, damaged flooring, and stained carpets. Short-term rental property coverage paid for repairs minus the deductible. Loss of income coverage paid for the three weeks the property was uninhabitable and unable to accept bookings.

Can I just use my regular homeowners insurance for occasional Airbnb rentals?

No. Most homeowners policies explicitly exclude business activity including short-term rentals. Even one rental can void coverage if not disclosed. Some insurers offer endorsements for occasional rental (under 30 days per year), but frequent rentals require specialized coverage.

Can I just use my regular homeowners insurance for occasional Airbnb rentals?

Airbnb offers limited host liability coverage, but it’s secondary (pays only after your insurance) and doesn’t cover property damage to your home or contents. It’s not a substitute for proper short-term rental insurance—consider it supplemental only.

Does my policy cover damage caused by guests to neighbors' property?

Yes, liability coverage extends to damage your guests cause to others, including noise complaints that result in damages, property damage from guest negligence (like flooding from an overflowing tub), and injuries to neighboring property owners or their guests.

Are there restrictions on how many days I can rent?

Insurance policies vary, but most short-term rental policies cover unlimited rental days since that’s the policy’s purpose. However, your local municipality may restrict rental frequency, and some policies exclude properties rented more than 180 days annually (which may be better served by commercial property coverage).

What if my HOA or city prohibits short-term rentals?

Operating in violation of HOA rules or city ordinances can void your insurance coverage entirely. Insurers won’t cover illegal activity. Before listing your property, confirm you’re legally permitted to operate a short-term rental and comply with all registration and taxation requirements.

Verify Legal Compliance - Confirm your city allows short-term rentals and obtain required permits/licenses
Notify Your Insurer - Disclose short-term rental activity and obtain proper coverage before your first guest
Implement Risk Management - House rules, guest screening, security cameras (disclosed), and safety equipment reduce claims and may lower premiums

Next Steps: Protecting Your Property and Financial Security

Assess Your Current Situation

Identify which category applies to your property use. Your coverage needs change when circumstances change—buying a home, moving out to rent it, starting renovations, or listing on Airbnb all trigger the need for different coverage.

Review Your Existing Policies

Many property owners unknowingly have gaps in coverage or are using the wrong policy type for their situation. Confirm your current insurance matches your actual property use to avoid denied claims.

Plan for Life Changes

Anticipate coverage needs before circumstances change. Transitioning coverage types takes time—don’t wait until you’ve already moved out, signed a lease with a tenant, or accepted your first booking.

Contact us to discuss your homeowners liability insurance needs and ensure you have the right coverage for your specific property situation.