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March 2004 |
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Fire Insurance |
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ARE YOU REALLY COVERED?
In the aftermath of one of the largest, most destructive fires in California's history, one critical question looms for all those whose homes were either totally ravaged by the firestorm or otherwise damaged:
Will the insurance carried by those homeowners reimburse them for the full cost of rebuilding? Maybe not!
What about you?
Insurance experts report that many homeowners today are woefully underinsured for several reasons, but the two primary reasons are: 1. Insurance agencies fail to update homeowners policies, and, 2. Homeowners neglect to update their coverage to keep pace with increasing costs of labor, construction materials, and replacement of personal household goods and possessions.
Moreover, many insurance companies have stopped writing policies that guarantee to cover the entire cost of rebuilding a fire-damaged home.
Unfortunately, many of the affected California homeowners are now in dire economic straits as they struggle to rebuild their homes, buy necessities, and continue to pay off their remaining mortgages.
Can you afford to rebuild?
All across the country, the pre-foot costs to rebuild a home from the ground up have soared far above the replacement cost limits in most policies.
Depending on where you live, rebuilding costs can run anywhere from $50 per square foot, to $300 or more.
If your home burned to the ground, could you afford to replace it?
Do your insurance premiums automatically increase to keep up with the rising costs of replacement value?
Here are some useful tips to determine if your coverage is adequate.
* Check your policy or with your agent to find the exact
replacement cost limit for your home as spelled out in your homeowners insurance.
However, you must remember that replacement cost is not the same as fair market value or sale price.
This is extremely important.
* If your policy’s replacement cost seems low, ask your insurance agent to increase your limits to not only match today’s rebuilding costs, but for projected costs for a few years out.
But wait….
* Before being completely satisfied with your new, updated policy, get several per-square-foot estimates on the cost of rebuilding your home from reputable, licensed contractors.
If you own a much older home and want to change your home replacement policy, you are advised to explore extra coverage for upgrading that might require extensive work to bring your rebuilt house into compliance with new building codes.
What Was in Your House?
When homeowners who are victimized by a fire that consumed their house are asked to make a list of all their household assets, most fail to remember everything that had been destroyed.
Today is never too late to take the necessary steps to ensure you claim all you might have lost if you ever had to face this type of misfortune.
Where do you start?
Well, every bank has fireproof safety boxes for rent, and they should be considered a vital safekeeping area for your important papers, records, jewelry, family treasures, etc.
Be sure to keep a household inventory among your important papers.
If there is a fire in your home, or even a burglary, your inventory records will not only help you remember what has to be replaced, but how much each item is worth.
An inventory may also show that you need to increase your insurance now that some of your possessions are worth more than when you first bought them.
Beginning An Inventory.
Simply using a pad and pen, make your inventory by starting just inside the doorway of each room.
* List each item, its cost, date of purchase, and the cost of replacement.
* Include model numbers, brand names, and a general description.
* Take video or still pictures of each room in your house from several angles.
* Keep the videotape and/or pictures in your safe deposit box for protection.
* Take inventory of your garage where expensive tools and sporting equipment might be stored.
* The same holds true of your basement and attic.
Be sure to update your inventory every six months or so, adding new purchases and adjusting replacement cost.
Stay Safe.
Be sure!
Vickie Hughes
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