Repeated wildfires are bringing unwelcome change to the way we live in California. This year we had an early start to “fire season” — which many of us now see as the annual or quasi-annual “new normal.”
People are losing their homes or business property and, amid the heartache, many of us must now deal with the need to file and follow up on insurance claims. Few people know the process well enough to ensure they maximize what’s possible with their claims.
Success in getting the insurance payout you deserve boils down to five key elements — the policy itself, documentation, advocacy, emotional well-being and knowing your rights. Let’s look briefly at each of them.
The Insurance Policy
When fire destroys your home, think of the insurance policy as your “replacement asset.”
If you’re properly insured, it’s literally as valuable as your home itself. That’s why, when you buy, renew or upgrade your homeowner’s insurance, you should request a certified copy of the policy — not only the Declarations Page but all the endorsements. Review it to understand everything it covers, as well as all the benefits it provides. Your policy provides four main coverages:
● Dwelling — Not just the house, but also the “structures” that serve it, like water wells, septic system, solar power system.
● Other structures — Detached garage, sheds, fences, swimming pools, walkways, driveways, etc.
● Personal property — In essence, everything you’d take with you if you sold the house and moved out.
● Additional living expenses and/or fair rental value — This varies from policy to policy. Some have a dollar limit, others a time limit, and some have both.
In addition to these four coverages, most policies also include endorsements and sublimits — e.g., ordinance or law (code) upgrades; plants, trees and shrubs; debris removal and extended replacement cost.
It is critical to know the various timelines/deadlines your policy requires for filing a Proof of Loss and claiming replacement cost benefits. It is also essential to know the difference between replacement cost value (RCV) and actual cash value (ACV). Carefully read the definition of these terms in your policy, and ask your insurance agent to clarify them.
The burden of proof is on you!
In the end, the amount you receive depends on detailed documentation.
Begin NOW by documenting the contents of your home, so you can be compensated in case of loss. Take photos of what’s in every room, including the pictures on your walls and the clothing in your closets and drawers.
Back it up with an itemized, room-by-room inventory. After a fire, take pictures of everything that survived the flames, as well as the remains of the home and other structures. If possible, locate floor plans and structural engineering of the building.
Besides creating the most complete record possible of what you own (and keeping it safe, i.e., not in the house), keep a record of communications with insurance adjuster(s) — not only emails, but notes about phone and in-person conversations. You may well experience a revolving door of adjusters over the course of claim resolution; a paper trail will likely prove helpful.
To be compensated for living expenses, keep all receipts for restaurant meals, hotel bills and replacement clothing, toiletries and other necessities.
Determine early in the claim process if you want to handle the claim yourself, allow the insurance company adjuster(s) to handle it, or hire an attorney or public insurance adjuster to help you. There are pros and cons to each option, so weigh them carefully.
Losing your home and all your personal belongings and keepsakes is traumatic enough, but navigating the claim process sends emotional distress soaring.
You’ll want to balance two competing needs and desires — expeditious claim resolution and maximum financial recovery — which tend to be mutually incompatible.
Some people feel being able to move on with their lives is more important than the stress of trying pry loose every last dollar. But stress relief today might bring regret tomorrow, so consider your choices carefully. Know when to pick your battles and when to accept a reasonable claim settlement.
Know Your Rights
The following are several helpful resources for understanding your rights:
● California Insurance Fair Claims Act Statute – http://www.insurance.ca.gov/01-consumers/130-laws-regs-hearings/
● California Department of Insurance — the place to ask questions and/or file a complaint – http://www.insurance.ca.gov/
● United Policyholders (a nonprofit insurance consumer advocacy organization) – https://www.uphelp.org/. Its website has an abundance of helpful information. Following large disasters, they also provide informative workshops.
Our best advice: Be prepared. Document the contents of your home now. Put valuable papers (e.g., proof of home and automobile ownership, birth certificates, passports) somewhere safe — in a safe deposit box, for example, or with a trusted family member who lives elsewhere.