I don't know about other locations in California, but in our part of S.F. Bay Area very few homes have basements. The only water damage we experienced in over 40 years was from broken plumbing in a 2nd floor shower that reqired replacing flooring in that room and part of the ceiling below. No mold was found several years later when that house was inspected before sale. Maybe, to prevent mortgage delays for people purchasing homes, the state(s) will need to offer separate insurance policies for water damage, like the earthquake insurance issued by California Earthquake Authority.
-Mary C.