August 26, 2016–Teric Steines, CISR
From electrical issues to candle mishaps, the National Fire Protection Association reports an average of 357,000 residential fires each year. Being prepared is a good idea — and that includes knowing what your insurance policy covers and how much protection it may provide.
- One of the most important step you can take to minimize the financial consequences of a house fire is to review your homeowners insurance to determine whether your home is adequately insured for full replacement cost. Not only will the replacement cost of the dwelling determine how much you are compensated to rebuild, but it often helps the insurance company determine how much you will receive to pay for damage to other structures on the property, replacement of your personal property and reimbursement relating to the living costs (such as hotel stays and food purchases) incurred after losing your home. (See our article “Make sure you understand the replacement cost of your home” for more information on the importance of determining replacement cost.)
- Compile a thorough inventory of the valuables throughout your house to help ensure that your claim is paid quickly and fairly. This inventory should include pictures and original receipts for high-tickets items. Keep the inventory list at a secure location outside of your home, such as a safety deposit box or a fireproof lockbox. (See our article, “Protecting items of sentimental value.”)
- You may want to confirm that all of your personal property is insured for replacement cost rather than actual cash value (ACV). Replacement cost coverage means the insurance company will compensate you what it costs to replace an item, rather than what the item is worth today (ACV). This coverage is valuable if you have items in your home that were purchased some time ago and would cost much more to replace than they are worth.
- In the case of your most valuable property such as jewelry and high-end electronics, you may need to schedule these items to ensure that their full value is reimbursed should they be destroyed in a fire. Scheduling basically provides “mini-policies” that work to compensate you after a loss on items that are not explicitly covered on your standard homeowner’s policy.
It’s important to review your homeowners or renters insurance to ensure that your home and personal belongings are covered for fire damage. For more information about minimizing the risk and financial consequences of a house fire, contact us.Share