Thousands of structures have been destroyed because of the occurrence of wildfires in California. Because of these heightened wildfire activities, a lot of residences and homeowners are getting their fire damage claims in Los Angeles. As a result, it is also becoming difficult for such homeowners to obtain and keep fire insurance.
Homeowners in California have already been complaining about being dropped from their plans, and the number of these homeowners being dropped has increased the three times from years 2014 to 2022. Insurance premiums have also increased as reported by the California Department of Insurance. The California Insurance Commissioner even said that increase in rate shall be expected, and the more insurance policies will no longer be renewed especially to those homeowners who are living in high-risk areas.
Because if this, the quest to finding a new or a replacement policy has become more difficult and more costly than it was before. But all things considered, let us break down why such fire insurance is important –
What is Fire Insurance?
Fire insurance is specie of property insurance against the losses and damages brought about by fire. Usually, the standard coverage of a homeowner’s insurance policy already includes if there be an event of a fire. So as long as the homeowner is religiously paying for his or her insurance premiums, there should be not much of a problem when it comes to insurance claims because of fire damages. It is also possible that a homeowner will have to shell out more money for an additional coverage especially if such homeowner is living in a high-risk area, or when you cannot find coverage in the open market. This is a case wherein you will be getting insurance through surplus lines – these are types of insurance policies that protect against financial risks, one in which a regular insurance company won’t take on and are not required to follow the same state regulations.
What is the coverage for fire insurance?
Whether you are having a basic coverage, or that you are having limitations on your homeowner’s policy, the most important thing that a homeowner should know is the extent of his or her insurance coverage.
In the event that your whole house burned down, it used to have a guaranteed replacement, but insurers are already starting to rethink this type of coverage and started to apply an absolute limit on the amount that they will be paying.
The replacement cost that will be incurred for your home covers the cost of the damaged home against a similar home. However, some insurance companies are limiting this at 20% if the face value of the policy. This is going to be practically problematic especially in a largely damaged area which has the possibility to result in a sudden surge in prices. Some insurers may not even include covering additional expenses of restoring your damaged homes up to the new building codes.
It is recommended to purchase an extended replacement cost endorsement which covers add on costs on top of the policy limit in the event that there might be an occurrence of unexpected cost increases, and additional coverage for code-upgrade insurance to be able to cover other things that a basic policy might not be able to protect.
However, if you are currently not happy with your claims, you can always go and make a complaint to such insurer’s consumer relations department, or have the matter consulted with a lawyer. Here, it is important that you have kept your communications to the insurer because this will be part of your evidence during a dispute.
What is the process of filing a claim after a fire?
Just like other kinds of insurances, the first step that you should make is to document everything that happened. It is strongly advised for homeowners and also renters to use their smartphones or cameras, and walk around their property and take a video of the status of their belongings. This will constitute powerful evidence especially in case if there will be any disputes with the insurer.
These data should be protected so it is best to store the video footage on a computer drive or on your cloud account so that this will be accessible anytime, anywhere. Receipts are also strongly advised to be kept, like those expenses from hotel rooms, food, and rental payments in the event that your home has become completely uninhabitable. The additional living expenses can also be covered by your insurance policy.
The insurer will then send you a claims adjustor for damage assessment. It is recommended to use a local contractor to serve as a guideline to be used for an estimate. This will be very helpful especially when it comes to negotiations with your insurance company’s contractor.
There are licensed adjusters who are authorized to handle insurance claims by the Department of Insurance. These public adjustors mostly represent homeowners who are experiencing a fire or any calamity losses or damages and do not have adequate knowledge of what to do when it comes to processing insurance claims. These adjusters will help protect the property owners against insurers who will attempt to low-ball them with the settlement of their claims. Thus it is very important that as an insurance policyholder, you should know that you have the right to be adequately compensated for any loss to your respective properties.
When you decide to avail yourself for the services of an adjuster, they will then be responsible in the documentation of visible damages, assessing any possible unseen damages, and provide you will a full proof of loss. There will also be responsible for taking over all the communications until the case is settled, so you will no longer be stressed in processing your claims.
Even so, property owners should still be cautious against false public adjusters who are operating without a license. There is a risk that these adjusters might just be working in the same insurance company and will not have the policy-owners’ best interest.