What You May Not Know about Fire Insurance

Fire is considered a “peril” in the insurance industry. 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 could have trouble getting the company to pay a claim.

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 not normally covered by default.

Help Yourself and Your Policy

These simple installations generally help you qualify for discounts, as well as protect you from severe loss:

smoke detectors
carbon monoxide detectors
a sprinkler system
heat detectors
established fire escape routes and escape apparatus.
fire extinguishers in all cooking areas (inside and out), garage and basement
fireproof storage of flammable substances

A simple way to help protect your valuables is to have them appraised and stored in a fireproof safe, or even 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. Along with an itemized list and evidence of appraisal you should have photos. Insurance companies 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 later if it is missed in the first evaluation. This even includes pets in most instances. If you’re staying somewhere else while the property is being repaired or rebuilt, your insurance should 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.

Included in incidentals? Temporary housing and all essentials, transportation, clothing if all was lost, communication devices. 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.

Do you have Replacement or Cashout?

Actual cash value (ACV) can differ significantly from replacement value. Actual Cash Value is related to current 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.

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