After the Fire or Disaster: Dealing with Your Insurance Company

Ten tips for homeowners facing fire or smoke damage.

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Homeowners whose property has been damaged or destroyed will look to their insurance for relief -- with varying degrees of success. Here are ten tips to keep in mind as you interact with your insurance company and its adjustors.

1. Get an Advance

If you were forced to evacuate your home, you might not have grabbed basic necessities -- from a toothbrush to clothes that you can wear to work. Your homeowners' policy will cover the cost to replace these items, but you don't have to file a claim and have it approved before heading to a department store to purchase that suit you need for the office.

Instead, ask your company for an advance against your eventual claim. Ask a representative of the company to bring a check to you wherever you're staying, be it a hotel or a friend's house. Save the receipts for everything you buy, and be reasonable -- if you lost khakis and a blazer, don't head for the Armani suits (you'll end up paying the difference).

Check your policy -- even if you have "replacement" coverage for the house itself  (see Tip Six, below), you may have only "actual cash value" for the personal items that were in your home. A good agent will alert you to this and suggest buying an endorsement so that your contents will be covered under a replacement policy, too.

2. Secure Your Property

Every policy requires you to take reasonable steps to minimize the harm to your property. In legalese, this is known as your duty to "mitigate damages." It includes such common-sense steps as covering a section of your leaky roof with a plastic tarp until you can get it repaired or turning off the water when you discover a burst pipe. Your insurance company will pay these costs when you make your claim. Other steps you might need to take to mitigate damages include:

  • Stop the smoldering. After a fire, if the structure is still burning, contact the fire department to do what's necessary to prevent a flare-up.
  • Board it up. To prevent vandalism, board up your property and consider erecting a portable chain-link fence to keep people away.
  • Be vigilant. Depending on the situation, you may need to keep a close eye on your property, checking for new problems and making sure it hasn't been disturbed.

3. File Your Claim Right Away

All policies require homeowners to report their loss as soon as is reasonably possible. You can comply by calling your agent or sending an email. After that, you'll be asked to submit a "proof of loss claim," in which you itemize your losses and list the value. (Hopefully, you already followed the guidance in, "Preparing a Home Inventory in Case Your Property Gets Damaged or Stolen.") If you delay notifying your company, you may find yourself far down on the list when it comes time for the company to send an adjustor to deal with your claim.

4. Make Sure the Insurance Company Acts Promptly

Fortunately, insurance companies are required to handle claims in a timely manner. In California, for example, they must send you a "notice of intentions" within 30 days of receiving your claim. If there's no dispute over your coverage, you're entitled to payment within that time, too. If you haven't heard from your company and you feel that it's unnecessarily dragging its heels, write to it (and consider sending a copy to your state's Department of Insurance). Insurance companies are less likely to string you along when they're in the midst of a disaster and know that all eyes are on them.

5. Keep Track of Your Living Expenses

Your policy will include a "loss of use" clause, which entitles you to reimbursement for living expenses while you're out of your home. However, you're entitled only to additional living expenses -- that is, the difference between what it costs you to live on a daily basis at home and what it costs now. For example, if you ate most meals at home before the fire and regularly spent $300 a week on groceries, but are now spending $400 per week at restaurants, you can claim only $100.

When it comes to the motel bill, however, you can probably claim the whole thing. Even though you can't live at home, you still have to pay your mortgage, taxes, and insurance. (See Tip Seven, below, for more on paying your insurance premiums.)

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