I WOULD STRONGLY RECOMEND PURCHASING THE CLOSING PROTECTION IF YOU HAVE CONCERN OF FAILURE.  In Ohio it is optional for the Buyer/Borrower and Seller. 

The following is from our State required disclosure and is supposed to be offered and accepted or declined by the customers prior to closing.  It states:  "Closing Protection Coverage indemnifies you against the loss of settlement funds reusulting from any of the following acts of the Licensed Agent or anyone acting on behalf of the Licensed Agent....:  It would protect you in case of "theft, misappropriation, fraud or other failure to properly disburse settlement, closing or escrow funds".

I would not be familiar with the cost in CA but in Ohio it is $35.00 for the lender, $15.00 for the buyer/borrower and $50.00 for the Seller to purchase.  Normally the Buyer/Borrower pays at least $35.00 for the lender fee so the buyer gets a bit of a reduced rate at 15.00 ($50.00 total).

Good luck!!