How to Read, Review, and Understand Your Homeowners Insurance Policy: A Guide for 2025 LA Fire Victims

If you’ve been impacted by the 2025 Los Angeles fires, the first and most critical step is understanding your homeowners insurance policy. Knowledge is power, and knowing exactly what your policy covers—and what it doesn’t—can make all the difference in navigating your claim successfully.

Take a deep breath, treat this process like a school project, and get your tools ready: pens, highlighters, rulers, and sticky notes. Let’s break it down step by step.

Step 1: Gather Your Documents

Start by locating these key documents:

• The Declarations Page  (an overview of your policy’s main coverages and limits).

• The full Policy Document  (the fine print with all the terms, conditions, and exclusions).

• Any Riders or Endorsements  (additional coverage you’ve purchased or specific provisions).

If you don’t have these documents, email your insurance company immediately to request them. Under California law (California Insurance Code § 2071), they must provide these within 15 days.

Step 2: Understand the Four Key Coverage Areas

Most homeowners insurance policies are divided into four main categories, often labeled as Coverage A, B, C, and D. Here’s what each one typically covers:

Coverage A: Dwelling

This is the primary coverage for repairing or rebuilding your home’s structure if it is damaged or destroyed.

• Key Points to Know:

  • Check the policy limit (the maximum amount your insurer will pay).

  • Look for Extended Replacement Cost Coverage (if your policy covers costs beyond the policy limit due to increased construction costs).

  • Does your policy include Code Upgrade Coverage? This pays for rebuilding to meet modern building codes.

Example: If your policy limit is $500,000, but rebuilding your home post-fire costs $650,000 due to higher construction costs, Extended Replacement Coverage may cover the difference.

Coverage B: Other Structures

This covers detached structures on your property, such as garages, fences, sheds, or guesthouses.

• Key Points to Know:

  • Coverage B is usually a percentage of your Coverage A limit (often 10-20%).

  • Confirm what’s included—pools, gazebos, or certain landscaping may be excluded.

Example: If your home’s policy limit is $500,000 and your Coverage B is 10%, you have $50,000 to repair or replace detached structures.

Coverage C: Personal Property

This protects the belongings inside your home, such as furniture, electronics, and clothing.

• Key Points to Know:

  • Replacement Cost vs. Actual Cash Value:

    • Replacement Cost: Covers the cost to replace items at today’s prices.

    • Actual Cash Value: Deducts for depreciation, paying less.

  • Check for sub-limits on high-value items like jewelry, art, or electronics.

  • Inventory your losses (create a detailed list with descriptions, quantities, and values).

Example: If your TV’s replacement cost is $1,000, but its depreciated value is $400, the type of coverage you have determines how much you’ll receive.

Coverage D: Loss of Use

This pays for additional living expenses (ALE) if your home is uninhabitable due to fire damage.

• Key Points to Know:

  • Covers expenses like hotel stays, meals, and transportation.

  • Some policies have a time limit (e.g., 12 months) or a dollar cap (e.g., 20% of your dwelling coverage).

Example: If your policy allows $100,000 for ALE and you’re displaced for six months, you can claim reasonable expenses for rent, food, and related costs within this limit.

Step 3: Highlight Strengths and Weaknesses

Once you understand the types of coverage, assess your policy:

• Strengths:

  • Does your policy include Extended Replacement Coverage?

  • Are there high limits for Additional Living Expenses?

  • Do you have sufficient coverage for valuable personal items?

• Weaknesses:

  • Are there exclusions for certain types of damage, like smoke or debris removal?

  • Is your personal property coverage based on Actual Cash Value instead of Replacement Cost?

  • Are there low sub-limits on high-value items?

Use highlighters to mark key sections. Highlight green for strengths, yellow for neutral points, and red for weaknesses or exclusions.

Step 4: Create a Question List

After reviewing your policy, write down any questions you have. Here are examples:

• What does my policy specifically cover for wildfire damage?

• Do I need to provide receipts for all personal property claims?

• How does my insurer calculate depreciation?

• What’s the process for claiming Additional Living Expenses?

Email or call your insurance agent, and don’t be afraid to ask for written explanations. Keep a record of all correspondence.

Step 5: Document Everything

Throughout this process, documentation is critical. Here’s how to stay organized:

1. Create a Claims Folder: Use cloud storage (e.g., Google Drive, Dropbox) to save your policy, receipts, photos, and correspondence.

2. Take Photos: Document damage to your home and belongings immediately.

3. Track Communications: Record every phone call with your insurer (date, time, and details) and confirm all discussions via email.

Conclusion: Knowledge Is Power

Understanding your homeowners insurance policy is the foundation for successfully navigating your claim. By knowing the strengths and weaknesses of your coverage, you can advocate for yourself and ensure you receive the compensation you’re entitled to. Treat this like a school assignment: arm yourself with pens, highlighters, and determination. Your future self will thank you.

For more resources and templates to help with your claim, visit www.theemilypepper.com.