Fire Insurance Claims by Homeowners & The Legal Process
If your property has been damaged by fire or smoke, you should act promptly in filing your insurance claim. You may need to get an advance from the insurer to cover the expenses for necessities that you may have left behind when you evacuated the home. The insurer can send a representative with a check to your emergency location, such as a hotel. Depending on your policy, the check may cover the actual cash value of the personal items, or it may provide their replacement value. The actual cash value will be less than the replacement value because it accounts for the items being used rather than new, while replacement value does not account for depreciation.
You should also mitigate the damage caused by the fire. This means that you should take reasonable steps to minimize the risk of further harm to your property, such as turning off the water, stopping any further smoldering with the assistance of the fire department, and placing barriers around your house to prevent vandalism while it is vacant. You may need to return to your property sporadically during the time that you are living elsewhere, addressing any problems that arise and making sure that it does not look abandoned.
Fire insurance usually has a maximum per-item payout, so claims for items of particular value, such as art, jewelry, and family heirlooms, may be more successful if those items are individually insured.
Filing Your Claim
After fire or smoke damage, you can report your loss by contacting your agent. The next step is to complete a proof of claim. This provides a list of each type of loss that you have incurred, as well as its value. If you act promptly, you can expect the insurer to act promptly as well. It must provide you with its notice of intentions within 30 days of when it receives your claim. You should be paid within that 30-day period unless there is a dispute.
Keep receipts and records of additional expenses.
When you are listing types of loss in your claim, you can include any additional living expenses for your emergency location. In other words, you can get reimbursed for a hotel bill in its entirety. You will need to keep up with mortgage payments and other recurring costs related to your home, just as if you were still living there, so any costs related to replacement housing will be considered additional. On the other hand, you may not be fully reimbursed for your food if you are eating in restaurants because you would have needed to pay for groceries if you were eating at home. You would be reimbursed for the difference between the restaurant meals and the groceries.
While it may seem counterintuitive if your home has been destroyed, you should keep up with paying your insurance premiums. The policy provides liability coverage for everyone in your household, so it can cover damage that you cause at your emergency location. You can have that address added to your policy so that liability coverage applies. You may be able to get your premiums reduced in exchange for reducing the coverage that applies to the structure of your home, if it has been largely destroyed.
You should review the terms of your policy to determine whether it will cover actual cash value or the replacement cost of repairs. In some rare cases, a policy will provide guaranteed replacement coverage, which means that it covers all of your actual rebuilding costs. If it covers only actual cash value, this means that it will provide funds for restoring the home to its market value before the fire. If the policy provides replacement cost coverage, it will cover the cost of replacing the home up to the policy limit. Your home and its contents may have different levels of coverage under the same policy, unless you buy an endorsement to upgrade the level of protection for the contents.
Once you have determined which type of coverage the policy provides, you will need to estimate the market value of your home or the replacement costs. The insurer will provide their own estimate, which likely will be lower than you would prefer. You should retain your own professional to provide an estimate. This might be a contractor who is familiar with the insurance industry. If your claim is disputed, and a fair settlement seems unlikely, you can retain a public adjuster. This is a licensed professional who can negotiate with the insurance company for you. They will receive a percentage of your settlement, so this makes sense only if they are likely to greatly increase it.
Why Hire a Professional?
Hiring an independent professional to evaluate the damage will help a homeowner accurately estimate repair costs, identify damage that may not be obvious to the average person, and understand how an insurer will respond to this information.
You should be aware that you do not need to rebuild your home in the same location. If it has been destroyed, you may want to build a new home somewhere else. However, if it is more expensive to build there, you will pay the difference in the cost.
Closing Your Claim
An insurer has an incentive to resolve a claim efficiently before a homeowner discovers further items of loss. By contrast, a homeowner has an incentive to wait a reasonable time to make sure that they include anything that they overlooked. If you get a check with a statement that it is a full release of your claim, you should cross out that language and alert the insurer that you do not consider your claim to be closed.
If you have filed more than one claim, you may be concerned that you will face higher premiums or even lose your coverage. While this may occur sometimes in other areas of the insurance industry, homeowners rarely need to worry unless their claim appears fraudulent.