Fire caused by nature, or a natural pest like
squirrels chewing through wires, or even a pack of teenage boys carefully
ignoring warning labels on fireworks, is never pleasant. It takes on a life of
own and can be extremely dangerous to life and property. Fire is considered in
the insurance industry as a "peril." With the extensive menu of
insurance options available to homeowners and renters, make sure that your
policy covers fire damage as a peril or you might have trouble getting the
company to pay the claim.
Also note that in addition to your living
quarters, fire insurance policies can cover buildings other than your main
dwelling. If you have an "other structures" clause, you can have fire
insurance coverage for buildings such as garages, barns, pool houses, or
storage facilities.
Help Yourself and Your Policy
These simple installations might help you
qualify for a discount as well as protect you from severe loss:
- smoke detectors
- carbon monoxide detectors
- a sprinkler system
- heat detectors
- fire escapes
- fire extinguishers
- storage of flammable substances outside the home
A simple way to help protect your valuables is
to have appraisals (in a fireproof safe, or off-site) for high-ticket items
like jewelry or artwork. If you don't have an itemized list, you could
receive a much lower payout for the insurance company's standard value of such
belongings. Insurance companies will only pay so much, and often have caps or
limits, on replacement values for luxury items.
Keep paying your insurance premiums even after
a fire. Although this seems counter intuitive, paying to keep coverage current
will cover anything related to the incident, including pets. So, if you're
staying somewhere else while the property is being repaired or rebuilt, your
insurance will cover any incidentals while in transition, for example, a kennel
for Max. You can even use the policy to cover the place where you are staying
for liability purposes.
Included in "incidentals" is
temporary housing and essentials. If clothing and necessary items like
toothbrushes were destroyed, you can get an advance from your insurance company
to cover those types of expenses. Keep every receipt for your, and their
records.
Replace or Cashout
Actual cash value (ACV) can differ
significantly from replacement value. Actual Cash Value is related to market
value, the amount a buyer would have paid for the property had the home
not been destroyed.
Replacement value is probably the best route
to take, vs. ACV, as it makes the property as it was before. ACV is subject to
the fair market value of the home, which is based on comparables in the area.
There could be a considerable gap between fair market and the value of
replacing all the home's contents.
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