Alas, not. Most policies in California have a 15% deductible. That’s 15% of the insured value of your home. So for nearly all houses, a $25K bill is not covered. California policies are and have always been to cover catastrophic damage.
Wait I'm sorry but if the policies are to cover catastrophic damage, but if catastrophe actually strikes and the insurance company becomes insolvent, What's the actual point or purpose of insurance then?
2/3 of policies sold in California are assigned to the California Earthquake Authority (CEA), which is a semi-private/semi-public corporation that carries the principal risk. It was formed in 1994, when many private insurers discontinued earthquake insurance after the Northridge quake.
Insurance agencies serve primarily as vendors, customer service, etc., but the risk is carried by the CEA. The remaining 1/3 of policies are carried by a few private insurers who still underwrite policies.
In theory, that system should prevent insolvency. Remember that California is a huge state and even a very strong earthquake would still have fairly localized damage. For example, the 1906 earthquake (Richter 8.0) that levelled San Francisco did comparatively little damage to Petaluma, a city 40 miles to the north.
> Wait I'm sorry but if the policies are to cover catastrophic damage, but if catastrophe actually strikes and the insurance company becomes insolvent, What's the actual point or purpose of insurance then?
Most homeowners are going to get through a $25k bill ok. That’s about the price of the cheapest new car on the market, less than half the median wage in California. Worse case you add it to your mortgage.
A $250k bill is a different matter, that’s the sort of thing that will bankrupt many.