My insurance agent calls me every year to schedule an annual check-up. She wants to review my policies and make sure my coverage is still appropriate. I have gone once or twice in the last decade or so, but honestly most years, I cancel the appointment and duck her calls. Who has time, right? NOT THIS YEAR! I learned a lot of things from the devastating Camp Fire, but by far the most valuable lesson I learned was the importance of Homeowner’s Insurance. In the days, weeks and months following the fire, I worked with and spoke to dozens of families affected by the fire. Some experienced total loss, some smoke damage and some homes were seemingly untouched. Here is what I learned: All Homeowner’s Insurance is not created equal. Some agents and companies bent over backwards to help, some did their best to put up every roadblock under the sun, and some were mediocre at best. Then there were the really unlucky one’s: those that had let policies lapse or were simply under-insured. For those that had “good” insurance, they had checks in their hands within a matter of days, and for the most part, and while I am in no way minimizing the loss or the emotional toll, many were better off financially because of fantastic insurance policies. Should my home ever be damaged or lost, I want to fall into that category, and I want you to as well!
Let me start by saying that I am no expert on insurance and what I hope to accomplish with this post is to get you to call your insurance agent and review your policy. Maybe to even take it a step further and consider whether you are with the right insurance company/agent. Book an appointment with them and make sure that you understand your coverage and that it is adequate.
There are a few different types of coverage available. Actual Cash Value will reimburse you for the market value of your property, essentially what you could sell your home in its current (depreciated) condition, regardless of what it would cost you to replace the home. Conversely, a Replacement Value Policy will cover the cost to replace/re-build your home. What we found in Paradise is that the market value of many homes were significantly less than the cost would be to replace the home, as the price of available homes shot up in the weeks following the fire and the cost of construction was already at historical highs. You will also need to coverage for the contents of your home, make sure you understand and decide if this will be at cash value or replacement value.
In the aftermath of the fire, we found some companies paying out quickly, other claims are still on-going six months later. There are a few things you can and should do now to be prepared for such a worse case scenario. First, review your policies, make sure that you understand them and that they really are enough. To do this, make sure you have a handle on what it would cost you to re-build by doing some homework on cost of construction. If you determine that the average cost of construction in your area is $200 a foot and your home was 2,000 square feet, then you need $400,000 in replacement value coverage. If you have done any significant improvements, such as remodeling a kitchen or replacing your roof - let your insurance agent know!
Next, sketch and measure your home (if you have recently appraised, this would be included in the appraisal process). I had numerous fire victims tell me that their adjuster asked for a sketch of their home?!?! Take photos of your home in case the materials/quality is disputed. Lastly, document your contents and take photos, then upload those documents (and copies of any other important documents) to an off-site/cloud storage. MANY insurance companies required detailed lists of belongings/contents including estimates of costs and replacement value of those items.
As always, if you have any questions or if you want to discuss our experiences with insurance companies in response to the Camp FIre disaster, don’t hesitate to reach out to us! Most importantly, don’t wait. . . CALL YOUR AGENT NOW! Schedule that appointment to review your policy!