Home fire insurance

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Retired2
Posts: 54
Joined: Mon Jan 28, 2008 2:44 pm

Home fire insurance

Post by Retired2 » Mon Nov 13, 2017 4:16 pm

Northern California recently experienced in October 2017 wildland fires that were the state's worst ever. Approximately 5,000 homes were burned to the ground.

I was in an advisory evacuation area, but suffered no loss. I am hearing of many questions regarding home fire insurance and realize I need to learn a lot more to be ready for the next fire, should it come.

Let's assume my home burns to the ground and there is no mortgage.

Start with this: loss-of-use. I'm told the insurance company will pay for alternative living arrangements for one year; two years if you're in a designated disaster area, which we are. Are there daily or monthly limits to this payment? I've heard that if the payments are extended to two years, the total amount paid is the same as for one year, but you can draw on it for two years.

In this area, alternative living arrangements have become very expensive due to 5,000 families needing housing in an area that had minimal vacancies anyway.

Then, rebuilding will be slow. Architects and engineers will be overwhelmed and will not be available to complete their work quickly. Even getting a building permit will be slow, even though the county said they would speed up the process.

It would be impossible to rebuild in one year and I even have my doubts about two years.

Is it possible to be adequately insured for alternative living arrangements for as long as it takes to rebuild?



Next is debris removal.

Interestingly, FEMA will remove debris for free, and will only be paid from insurance if there is any money left at the end of rebuilding. However, FEMA insists on removing the foundation. In California, rebuilding a house on a new foundation requires a new tax assessment for the house at market value. For most people, this will be a major property tax increase. FEMA requires right-of-entry permission, and the deadline for that permission is so close that some people only have 10 days from the time they could first enter their property following the fire.

One can remove the debris privately, but the insurance company may have dollar limits on this. In any case, the debris removal contractor has to be certified by the county, which has yet to write the rules.

How can one be best insured for this debris removal process? What is an adequate dollar amount?

After that is rebuilding.

How does one become insured for rebuilding what you had with all of the building code changes incorporated? My current insurance policy sets a rebuilding dollar limit and says it will go to 25% more to incorporate new codes. How do I know that quality rebuilding can be done within my dollar limit especially when all the building trades are going to charge more due to the demand?

Additionally, how do I know if my insurance company is going to pay or if they are going to fight me on every item?

Then, how does having a mortgage on the property affect all of the above? If the insurance company pays off the mortgage, will there be enough left to rebuild what I had with the building code improvements?

Finally, is personal property.

I'm organized, but I couldn't make a list of the furniture in each room, the carpets and window coverings, or, account for all of the dishes and cookware in my kitchen. I certainly don't have an inventory of all of my books, CD's and DVD's. What about my antiques and all of the tools in my garage? I know the insurance company doesn't want to pay any more than they have to, but how do I prove what I had and how much it would cost to replace, and, how do I avoid making this effort a full-time job?

I know this is a long question. Usually a house fire is a rare event. It's now not rare in this community. I think every person living here knows at least five people who's house burned to the ground and with a degree or two of separation, knows someone who was killed.

R.

neilpilot
Posts: 1038
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Home fire insurance

Post by neilpilot » Mon Nov 13, 2017 4:19 pm

I'm sure this isn't what you want to hear, but it's likely the only way you will get correct answers to your detailed questions is by reading the policy and/or meeting with your agent. I'm sure other's will post their opinions or the specifics of their coverage. I can answer some of your questions for my policy, but that's of limited use to you.

barnaclebob
Posts: 2227
Joined: Thu Aug 09, 2012 10:54 am

Re: Home fire insurance

Post by barnaclebob » Mon Nov 13, 2017 4:42 pm

For the personal property part, just take a ton of pictures including serial numbers.

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Earl Lemongrab
Posts: 2933
Joined: Tue Jun 10, 2014 1:14 am

Re: Home fire insurance

Post by Earl Lemongrab » Mon Nov 13, 2017 5:03 pm

I doubt that the insurance pays off the mortgage. However, the lienholder has a vested interest in the property and making sure it gets repaired/replaced. That usually means that the checks for that portion are sent to the mortgage company and placed in escrow for you to draw on for the rebuilding.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

Rupert
Posts: 2670
Joined: Fri Aug 17, 2012 12:01 pm

Re: Home fire insurance

Post by Rupert » Mon Nov 13, 2017 5:48 pm

Retired2 wrote:
Mon Nov 13, 2017 4:16 pm

I'm organized, but I couldn't make a list of the furniture in each room, the carpets and window coverings, or, account for all of the dishes and cookware in my kitchen. I certainly don't have an inventory of all of my books, CD's and DVD's. What about my antiques and all of the tools in my garage? I know the insurance company doesn't want to pay any more than they have to, but how do I prove what I had and how much it would cost to replace, and, how do I avoid making this effort a full-time job?

R.
I can't answer most of your questions but I do know the answer to this one because I once posed a similar question to an insurance-adjuster friend (who happens to be in California right now talking to people like you): The insurance company really does expect you to enumerate every single item you lost, right down to the bottle of Windex under your kitchen sink and the bars of soap in your shower. You don't have to have receipts, etc., for all of it, but the more specific you can be, the more likely you are to be made something like whole. This conversation led me to video the contents of each room in my house. I narrate the video while I'm making it, i.e., here's my bookshelf with approximately 75 paperback books, here's the cleaning supplies under my kitchen sink, etc. I make sure to capture the serial numbers of any electronic equipment and highlight any special/rare/expensive items. I do this once a year every year before hurricane season, and it takes me a few hours. I also photograph the receipts for any expensive items I purchase, such as art, furniture, etc., at the time of purchase and store those in the cloud.

denovo
Posts: 3482
Joined: Sun Oct 13, 2013 1:04 pm

Re: Home fire insurance

Post by denovo » Mon Nov 13, 2017 6:03 pm

Retired2 wrote:
Mon Nov 13, 2017 4:16 pm


Then, rebuilding will be slow. Architects and engineers will be overwhelmed and will not be available to complete their work quickly. Even getting a building permit will be slow, even though the county said they would speed up the process.


This has come up in the context of earthquake on this forum a few times, and here's the conclusion I've come to. If you were in a situation where your neighborhood was wiped out, given the fact that many of your neighbors may have been uninsured, or underinsured, and given the likelihood of cost over-runs because of rebuilding, your best alternative would be to just buy a different house with the proceeds of the insurance.

talzara
Posts: 277
Joined: Thu Feb 12, 2009 7:40 pm

Re: Home fire insurance

Post by talzara » Mon Nov 13, 2017 6:06 pm

neilpilot wrote:
Mon Nov 13, 2017 4:19 pm
I'm sure this isn't what you want to hear, but it's likely the only way you will get correct answers to your detailed questions is by reading the policy and/or meeting with your agent. I'm sure other's will post their opinions or the specifics of their coverage. I can answer some of your questions for my policy, but that's of limited use to you.
Agreed.

Some policies cover loss of use for "the shortest time required to repair or replace the damage." Others cover the shortest time or two years, whichever is less. You have to read the policy to find out if there's a time limit.

Go to the insurer's website, login to your account, and look around. If you're lucky, you'll find a complete copy of the entire policy. If you're unlucky, you'll have to look through your bills and piece together all the endorsements and amendments.

talzara
Posts: 277
Joined: Thu Feb 12, 2009 7:40 pm

Re: Home fire insurance

Post by talzara » Mon Nov 13, 2017 6:21 pm

Retired2 wrote:
Mon Nov 13, 2017 4:16 pm
Interestingly, FEMA will remove debris for free, and will only be paid from insurance if there is any money left at the end of rebuilding. However, FEMA insists on removing the foundation. In California, rebuilding a house on a new foundation requires a new tax assessment for the house at market value. For most people, this will be a major property tax increase. FEMA requires right-of-entry permission, and the deadline for that permission is so close that some people only have 10 days from the time they could first enter their property following the fire.

One can remove the debris privately, but the insurance company may have dollar limits on this. In any case, the debris removal contractor has to be certified by the county, which has yet to write the rules.

How can one be best insured for this debris removal process? What is an adequate dollar amount?
FEMA denied claims for foundation removal after the San Diego wildfires in 2007: https://www.fema.gov/appeal/219373

Debris removal is typically included in the policy limits. If you reach the policy limits, you get an extra 5% allowance for debris removal.

If you feel your policy limits are too low, you could increase them. That would also increase the amount available for debris removal.

boglerdude
Posts: 447
Joined: Fri Jul 10, 2015 1:28 am

Re: Home fire insurance

Post by boglerdude » Tue Nov 14, 2017 1:41 am

Read your policy in full.

Do the narrated video of your stuff and consider minimizing;
viewtopic.php?f=11&t=232027

Use an insurer that wont fight you, like Amica or Chubb (some say)

I know a good independent agent, anyone can PM me for that info.

mnnice
Posts: 233
Joined: Sat Aug 11, 2012 5:48 pm

Re: Home fire insurance

Post by mnnice » Tue Nov 14, 2017 8:55 am

Loss of use can vary a lot. Some have a dollar amount and others are more time oriented coverage. Check your declaration page it doesn’t matter what your coworkers coverage is. :wink: We received payments for increased commuting costs and increased utilities cost as the replacement housing was farther from work and was more costly to heat.

As you know from others in your social circle dealing with your claim would become a demanding part-time job. I would also assert that some insurers will be easier to deal with than others but being a strong advocate for yourself will be a very important skill to have in this situation. My family experienced the fire loss of our rented house and I was glad I was underemployed at the time and had time for deal with the mountain of minutiae and self-advocating with my insurance company.

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