What You May Not Know about Fire Insurance
By Ben Scranton, RAPV
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 counterintuitive, 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.
Source: RAPV, Ben Scranton