1. What Your Homeowners Insurance Policy Covers for Fires.
Although most homeowner’s insurance policies cover fire damage, it’s not the whole story. Every homeowner’s insurance policy is different, but most policies cover property that was destroyed by fire, or damaged by fire, soot or ash—for both your home, and all the property inside of it. A typical homeowner’s policy also covers the cost of your lost belongings and in some cases even landscaping costs. However, in some areas that are particularly prone to wildfires, residents may be required to purchase additional coverage for fire protection.
Your policy may also include coverage for categories of expenses, including:
- Additional Living Expenses. If your property is not safe to live in, you should check if your policy covers “Additional Living Expenses.” If it does, it means that it covers relocation-related expenses, such as temporary shelter, clothing and food. It may also cover extra transportation costs due to your relocation to school or work, furniture rentals for your temporary residence, pet boarding, moving costs, telephone or utility installation costs in your temporary residence, and other out-of-pocket expenses you have while you are unable to return home.
- Personal Property. Your insurance policy will also cover for your personal property loss. This includes all of the items inside your house, such as your furniture, clothing, electronics, and appliances. To ensure that you receive full compensation for the goods that were destroyed, you should take extra care in documenting the personal property that was lost. See the section below about Preparing for the Adjuster for more details on how to document your personal property comprehensively.
- Your Dwelling. Your policy will also cover structural damage to your home and your real property. But in many cases, structural damage to your home may not be immediately visible. In these cases, your adjuster should suggest that you hire an expert engineer who is licensed to inspect the property. For all repair work, obtain multiple bids from reliable and licensed contractors for all of the repair work your home requires.
- Water Damage. In most circumstances, homeowner’s insurance policies do not cover floor damage. However, many policies cover other types of water damage that may be incidental: for example, if a tree crashed because of high winds, broke through your roof, and then you suffered water damage from rain. If you’re uncertain about whether something is covered, consult your policy and your insurance agent.
- Proof of Loss. As part of the claims process, your insurance company will likely send you a claim form that’s known as a “Proof of Loss” form. This is an official statement that you make, as the policy holder, to your insurance company about the losses you’ve incurred. The purpose of this document is to put your insurance company on notice to the potential extent of its liability.
2. Preparing for the Claims Adjuster.
One of the most important things you can do after suffering fire damage is to contact your insurance company immediately. This is essential to give immediate notice of your damage. It also triggers a timeline for your insurance company to respond to your notice and provide an explanation of your coverage.
Before you call to report your damage, consider the following steps:
- Be prepared to ask questions. You’ll want to know what your policy covers, how long it will take to process your claims, and how much you have to pay as a deductible.
- Be ready to request that your insurance company send an adjuster to your property as soon as possible.
- Document everything. You’ll want to create a list of all your damage, including all of your belongings and property that were damaged or destroyed by the fire. This should include destroyed and damaged physical property, including your:
- Household belongings, including tools, crafting materials, linens, china and silverware, electronic equipment, sports equipment, and holiday decorations;
- Real Property, such as land and crops; and
- Structures, such as sheds and garages.
Support your written list with photos and videos of your property and home.
Later, you’ll have a visit with a claims adjuster, who is a person who is professionally trained to assess damage to your property. This person will visit your home before your insurance company declares what damage it will cover, in order to independently assess the value of the damage you’ve incurred. In most situations, the insurance adjuster will conduct a complete and thorough inspection of your home to fully evaluate the damage. Throughout this entire process, keep a record of all communications with your insurance company and your adjuster.
3. Dealing with Replacement Costs.
Residents recovering from the California wildfires have already discovered that the cost of raw materials—including wood, concrete, nails and insulation—are also rising. Perhaps more than anything, the cost of labor for reliable contractors is increasing day by day, as the demand for licensed contractors and repairmen is at an incredibly high level.
But with the increase in the demand-to-supply ratio, be hyper aware of scams. Take steps to ensure you hire reputable contractors, including:
- Asking for references and to see applicable licenses.
- Seeking bids from multiple contractors to compare rates and what is included in their services.
- Making sure that each bid is very detailed, including specific plans the contractor has for the repair procedure, the materials he or she will use, and a line-by-line description of the materials, labor costs and prices associated with each.
During this rebuilding period, also be aware of how your insurance company calculates the replacement cost for your damaged or destroyed property. Typically, this will be either a “replacement cost” calculation or an “actual cash value” calculation. Our article on Replacement Costs discusses this in detail.
But regardless of the way your policy calculates your replacement costs, be sure to keep detailed records and receipts of all of your repair work, contracts with repairmen and contractors, materials purchased for repairs, and goods you buy to replace your damaged property. This should be everything from large items like furniture and your vehicle down to small, less expensive items like school supplies and underwear, because it all adds up, and you’re entitled to reimbursement for them.
4. Finally, Know Your Legal Rights.
Throughout the entire process of returning to your home, recovering your property, rebuilding your home and restarting your lives, perhaps the most important aspect is staying informed. To stay on top of all the details, shifting policies and piles of paperwork, you may want to consider hiring an attorney who is deeply experienced in filing insurance claims and insurance litigation.
If your insurance company denies your claim, you should not accept the denial without question. There are certain steps to dispute the denial, including:
- Request an explanation of the denial, with an explanation of the reasons for the denial. Ask them to cite specific sections of your insurance policy for each denial, and explain why the policy permits each denial.
- Contact the California Department of Insurance as a resource.
- Contact an experienced attorney.
Adding to the confusion, recent reports indicate that the fire may have been sparked by downed power lines that are owned and maintained by the California utility giant Pacific Gas and Electric (“PG&E”). The initial investigation indicates that PG&E’s power equipment failures led to the wildfires. This information raises questions about how well the utility maintained its equipment. That’s because, under California state law, PG&E is required to maintain its equipment by doing routine maintenance, such as cutting back trees and limbs from power lines to reduce the risk of fire.
If PG&E negligently failed to maintain its power line equipment and infrastructure, it could be found liable for the fire—and potentially the damages you and your family incurred as a result.
Whether to preserve your rights to potential litigation, or to help you through the claims process, you should consult an attorney with experience in fire-related litigation and claims.
We have a team of insurance experts and attorneys who are ready to counsel victims of fire and other natural disasters about their rights as insured, throughout all stages of the insurance claims process. We are here to make sure that you understand your rights, and that those rights are protected.
We can help you document your damage efficiently and completely, so that you submit a comprehensive claim to your insurer and maximize the amount of compensation you receive for your losses. And we’re here to advise you throughout every stage of the claims process to make sure that you are not taken advantage of by your insurance company, and—most importantly—that you receive the maximum compensation you deserve for your losses.