Insurance Code section 2051.5 - the most important law you know nothing about.
Our Bible: The California Insurance Code
Okay, so—the California Insurance Code. We love it. Next to our actual bibles, it is our bible for handling insurance claims. We have discussion groups about it. We dream about its twists and turns, the way others might dream about Matt Damon in a Bourne movie.
And there’s one section we can’t stop talking about these days...
What Is Insurance Code 2051.5?
In 2004, California passed the Homeowners Bill of Rights, which included Insurance Code Section 2051.5. Here’s what it says to insurance companies:
If a homeowner suffers a covered loss and repairs their home, the insurer must pay the actual cost of those repairs—not a hypothetical estimate, not a lowball payout—just the real, final number it took to fix the house.
Simple, right? Add up your construction receipts, hand over the bill, and the insurance company pays.
Why This Matters to Homeowners
Before this law, insurers often paid an initial amount after a loss, then said you might get a few dollars in depreciation after you finish your repairs. But here’s the kicker—they’d disappear. No final payment. No follow-up. Just radio silence.
Now, thanks to 2051.5, the insurer is legally required to wait for the construction to be completed, then pay the homeowner for the full cost—not just a depreciated estimate.
How Insurance Companies Avoid Paying Full Repair Costs
We wish this were the part where the story ends. But it’s not.
Some insurers don’t like this law. So what do they do? They hide it. They misinform their customers. They’ll say something like:
"The most you’re entitled to after repairs is a little leftover depreciation."
And that’s it. Most people don’t even know Insurance Code 2051.5 exists—so they never make the claim for what they’re legally owed.
And because these insurers skip out on paying full amounts, they pocket the difference—unfairly profiting over companies that actually follow the law.
The Bottom Line: The Law Is the Law
We’re not against insurers making money—as long as they follow the rules.
But California law is clear: Insurance Code 2051.5 requires insurers to pay the actual cost to repair your home once repairs are done.
So if you’ve rebuilt after a loss, and your insurer didn’t pay the full cost?
👉 Go get your money—and tell them Kerley Schaffer sent you.