In speaking to a friend who loss her home in one of the January 2025 fires in Los Angeles, it became clear to me that many homeowners didn’t understand their policy. Let’s be clear, I’m not an insurance agent, and I’ve never had to place an insurance claim on my property. I don’t have on my realtor hat right now however, I do understand the policy that I purchased. I would like to bringing awareness as a homeowner, and policy holder. No two policies are alike. This is simply a reminder for one to understand a few key considerations regarding fire insurance and rebuilding after a disaster. I won’t go over all of the elements of the different insurance policies, this is just to get one thinking and encouraged to speak to their insurance agent about their own specific policy.1. Verify Your Coverage: Contact your insurance agent to confirm you have enough fire insurance to fully rebuild your home if the unthinkable happens. Post-COVID inflation and the rising cost of materials like lumber have significantly increased rebuilding expenses. One might speak to a builder and find out how much to rebuild their home price per square foot in today’s market minus the land and then verify their coverage.
2. Understand Your Policy: Take the time to carefully review your policy. Many underinsured homeowners in recent disasters didn’t realize the limitations of their coverage until it was too late. Key questions to ask include:
• How much will your insurance company provide day one for food, cloths, toothbrush etc.?
• How much is allotted for hotel stays, and temporary housing once you find a rental?
• How long does your policy allow for temp housing, two years, three years or what?
3. Rebuilding Takes Time: Rebuilding after a fire can take longer than expected. Ensure your policy provides adequate coverage for temporary housing and living expenses comparable to what you have now for the entire rebuilding process.
4. Personal Property Coverage: Understand how personal property coverage works and verify if it’s sufficient to replace your belongings. Remember, there are depression factors. Find out how much your insurance company will reimburse you after you receive funds, and you go to repurchase personal property…. Example a sofa might be depreciated 10% per year. However, when you go buy that new sofa it will cost more now then when you baught it. When you buy a new sofa will your insurance company give you the difference with a receipt? You have X amount of personal property insurance. Understand that if there’s a loss the insurance company doesn’t just write a check in X amount.
5. Mortgage and Rebuilding Funds: Be aware that if you have a mortgage, insurance funds for rebuilding will often be issued jointly in your name and your mortgage company’s name. These funds are typically placed in an escrow account and released in increments as rebuilding progresses.
There’s so many questions, just staying informed and being proactive can make a difficult situation a little easier to navigate. If you’re unsure about any aspect of your policy, reach out to your insurance agent for clarification. A good agent won’t mind to answer all of your questions. Being prepared and understanding your coverage will help ensure you’re financially and emotionally equipped to recover if disaster strikes. Stay safe and vigilant.
Also, find out if your highly valuable jewelry is insured most often it’s not, that’s where riders come in. Find out about cars left behind those that are licensed and those that are not. Valuable art work may not be covered.
Consult with your insurance provider to understand the terms, exclusions, and conditions related to fire damage in your specific homeowners policy. Last find out if your policy includes fires set by arsonists.
If you are in the market to purchase you will need a homeowners insurance policy. Reach out to me with any questions that you may have regard to purchasing a home, I’m happy to assist.
