The massive and costly damage that is caused by California wildfires over the last couple of years should serve as a reminder on why it’s vital to both know how you should proceed after finding yourself victim to a large-scale fire, and fully understand your fire insurance coverage before you need to call upon it.
Once the immediate danger of a fire is over, you will need to assess the situation and the resulting ramifications. If the disaster has created large-scale destruction, then just the number of people impacted and the vastness of the destruction itself will most likely impact both the cost and pace of your rebuild. For example, available building materials will be depleted quickly and additional materials will be in high demand. Similarly, contractors will be available in limited numbers and be in high demand. The result – increased premium prices for supplies and contractors.
Given the above circumstances, it’s necessary for you to request your insurance adjuster and contractor work together to reach an agreed price for your reconstruction. You might ask both parties to meet with you simultaneously at your home during the cost estimate of the reconstruction.
In addition to knowing how to proceed after a disaster, you also need to fully understand your insurance coverage. Do you know how much of the damage your insurance policy would cover?
If you opted to insure your home for 100% of its estimated replacement cost when you purchased your policy, then it should pay the cost to rebuild up to that estimated replacement cost. You can add at least an additional 25% if you opted for an extended replacement cost endorsement in your policy. Additionally, a supplemental building ordinance endorsement in your policy will cover between 10% and 100% of the cost to bring your home up to code if there have been any new or changed construction codes since it was first constructed. A Blanket limit is another beneficial option to a home owners policy in lieu of specific limits which allows one blanket limit for replacement of dwelling, loss of use, personal property to be shared any way you wish.
You will need to make an inventory of your home’s contents that were destroyed in the fire to receive compensation from your insurer. To make the settlement process smooth, make sure to provide the description; total cost of replacement, including sales tax; life expectancy; & age of each item. Don’t forget to verify the replacement cost by including the retailer’s name and phone number and salesperson’s name -or- the web addresses for any prices you obtained online. The average percentage of depreciation can be figured by dividing the age of the item by its average life expectancy. You will be paid the withheld depreciation difference on your destroyed items when you replace them with comparable items if your policy only covers replacement value.
Additional living expenses or loss of use, such as rent or a comparable furnished living area, may also be paid under your policy. Of course, this will be minus those expenses, such as mortgage payments and utilities, not directly resulting from your home having been destroyed. Coverage is usually a maximum of 20% of your home’s insurance limit and will generally continue for 12 months or less. Even if your home isn’t damaged, your living expenses may still be covered if your home is uninhabitable by government order. This coverage will end when the government allows you to return to your home.
The right coverage can ease some of the trauma a fire disaster causes to your life. However, you must know what you have and how it works to determine if you have the right insurance coverage in place to meet your needs.
Contact us to see if you can save money on your insurance by speaking to a professional independent insurance agent at Journey Insurance.
Let us sift through the hundreds of insurance programs to find you the most competitive rates available. Let us do the paperwork while you spend your time doing something you actually enjoy!
Journey Insurance Agency * Irvine, California * 888.323.7480
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