Cal. Mil. & Vet. Code § 987.74

(a)
1. (1) All properties purchased by the department shall be covered by insurance. Except as set forth in regulations adopted by the department pursuant to Section 987.93 in lieu of, or in addition to, the provisions of this subdivision, with respect to cooperative dwelling units, insurance purchased by the department shall be guaranteed replacement cost coverage as described in subdivisions (e) and (f) of Section 10102 of the Insurance Code against fire and other hazards for the full replacement cost of the improvements or structures, shall include limited building code upgrade as described in Section 10103 of the Insurance Code, and shall be placed with a company or companies as the department may determine from time to time.
2. (2) The department may charge purchasers a premium to cover the cost to the department for insurance obtained pursuant to this subdivision. The premium shall not exceed the actual cost to the department for the coverage provided.
(b) The contract made between the department and the purchaser shall provide that the purchaser maintain the farm or home as their place of residence and keep in good order and repair all buildings, fences, and other permanent improvements situated thereon. Insurance policies purchased by the department shall be obtained to insure and keep insured against fire and other hazards, all buildings, fences, and other permanent improvements on the property. All policies shall be written with any loss payable to the department and the purchaser as their interests may appear. Insurance shall be in the amount, with the insurance companies, and under the terms and conditions as may be specified by the department.
(c) Upon renewal, the department shall assist the purchaser in determining the insurance level necessary to repair or replace the damaged or destroyed dwelling with like or equivalent construction and in determining how best to purchase additional coverage, if desired. The purchaser shall be solely responsible for requesting in writing and maintaining any additional amounts of insurance necessary to protect their interest in the property, and shall bear the risk of any loss in excess of the amount of insurance in force at the time of the loss.
(d) The department shall annually send a disclosure notice to all purchasers who have residential property insurance provided through the department. The notice shall identify the type of coverage, and shall disclose all of the following in a clear and reasonable manner:
1. (1) The limits of liability for the structure and improvements.
2. (2) The amount of any deductibles.
3. (3) Whether the policy covers the increased costs due to changes in building ordinances or laws regulating construction or repair.
4. (4) A statement explaining the importance of having guaranteed replacement cost coverage.
5. (5) A statement that the policy provided by the department provides limited building code upgrade coverage and the applicable limits and restrictions to that coverage.