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Don’t Risk Your Home: Here’s Why You Need Fire Insurance Coverage

Fires in California aren’t anything new. In fact, just from January 1, 2018, to May 6th, 2018, there have been 974 fires that have burned 5,812 acres of land. When six major wildfires turned parts of southern California into cinder and ash, more than 1,000 structures were destroyed. These fires have been dubbed the fifth-largest wildfire in the state’s modern history.

Homeowners who live in Southern California know the importance of having fire insurance coverage.

But, for those who are thinking about moving to Cali and aren’t certain about that extra expense, you may reconsider after reading this article.

fire insurance coverage

Why Do I Need Fire Insurance Coverage?

Fire insurance is designed to protect you, the homeowner, from having to shell out tens of thousands of dollars on your home and/or property from damaged partially or completely due to a major fire. Your insurance policy will cover the cost of the repairs, but it could also pay for temporary housing during the repair or rebuild process. This, naturally, depends on the level of coverage you have.

This insurance is essential for everyone, but it’s especially important if you’ve amassed a decent amount of money and bought the home of your dreams in Southern California.

What Should I Look for When Choosing Fire Insurance?

You’ve worked hard for everything you have, so it makes perfect sense you would have the best luxury home insurance policy you can get. If your policy doesn’t include coverage from a brush fire, then you’ll certainly want to make you have additional coverage just for that.

If you already have an insurance agent, then they’ll be able to walk you through the various plans available, however, you first have to do a little bit of homework yourself.

Know Your Property Value

The first thing you will need to do is know how much your home is worth, but also how much your possessions are worth. You’ll want to update this figure every year (or 6 months if you’re in the habit of renovating frequently or buying new and expensive toys).

Once you have a good idea of the monetary value of your home and your possessions, then you’ll want to choose a plan to adequately covers this amount.

Note: We recommend saving receipts or taking video documentation around the home and property, so everything is accurately documented. You don’t want to be denied a payout because the insurance company doesn’t believe you have an original Edgar Degas painting!

Stand Firm

The next thing you need to do is choose the right package for your needs. Your agent will be able to go over the ins-and-outs of your plan, but if you have any questions, you need to speak up so there are no doubts later.

The experts of Save-On Insurance Services will help you determine the appropriate amount of coverage so you’re not overpaying for coverage you don’t need, but more importantly, so you’re not leaving yourself with uncovered pockets.

Replacement Cost vs. Actual Cash Value

You may be presented with two payout options: replacement cost and actual cash value. You always want to go with replacement cost instead of actual cost value (ACV) because ACV will pay you the depreciated value of your items.

If your property value dropped, you aren’t likely to receive the full amount of money you’d need to repair the damage to its original state; pre-fire.

Also, you will want to ask your agent about guaranteed replacement cost for the actual structure. Not only will this pay for the complete replacement of your home, but it could even give you coverage if the damage is more than the coverage limits.

Do keep in mind it will probably cost a significant amount of money because you’re ensuring 100% of your home, but you will have peace of mind for the future. Plus, if your home is ravaged by wildfire, you’ll be protected from a total loss.

Think About Disaster Living Expenses

The fire insurance policy you choose should cover any hotel stays while your home is being rebuilt or repaired. In a worst-case scenario, it should cover a rental apartment or home if your home is inhabitable. In the past, there have been instances where homeowners must live elsewhere for more than six months due to severe fire damage.

With that said, there is a cap on how much disaster living expenses your policy will cover. It’s usually 20% of the overall coverage. So if you have a $2.5 million home, you would have an additional $500,000 for living expenses during the repair time.

How to Make an Insurance Claim

Making a claim on your fire insurance coverage is just like filing any other insurance claims. You will want to make sure you notify your agent of the fire as soon as you can. And, when you do, be sure you obtain and record your claim number, a phone number, and the name of your claims adjuster.

This is the time where you will want to show any receipts, video documentation, and other proof of valuable items in the home. If you feel you are owed more money to cover your losses, be firm. You took out this policy to protect yourself, and you shouldn’t accept a lower amount than you are owed.

Once your claim has been filed, you will have to sit back and be patient. Insurance companies have a lot of clients to handle and if those clients are affected by the same wildfire as you are, your insurance company is going to have a large number of claims to review and process. However, if it feels as though it is taking longer than reasonably expected, you don’t want to feel pressured to settle on any amount they offer just because you want to move on and be done.

Remember, you’re paying a lot of money for this coverage – you deserve every penny you are owed!

Final Thoughts on Fire Insurance Coverage

Some people believe insurance is just a scam because you’re paying money for something you’ll never use. While it’s true you are not reaping the benefits of the insurance policy right away, you’ll be more than relieved if your multi-million-dollar home is reduced to ash after a wildfire, act of arson, or construction or utility malfunction.

If you want to learn more about fire insurance, we can help! Contact us today to chat with an agent. We want to help!