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Top Ten Tips for Filing Fire Insurance Claims

As fires become an increasingly prevalent threat, especially in places like Southern California, insurance companies constantly try to cut corners on fire insurance claims in an attempt to save money. The increasing threat of fires makes familiarizing yourself with how to file fire insurance claims more important than ever. Losing your home and personal belongings to a fire is already a devastating experience. The last thing you want is your homeowners' insurance company giving you a hard time regarding your claim. Here are some tips to follow when dealing with your homeowners' insurance company regarding fire insurance claims.

1. Ask for an advance against your ultimate fire insurance claim

If you were forced to evacuate due to the dangerous conditions, you may not have grabbed essentials like toiletries or clothes for school and work. Some of these things may have even been completely lost in the fire. Don't panic. Call your insurance company and ask that someone bring a check to wherever you are staying. That way you can go purchase your necessities without having to wait for your ultimate insurance coverage.

Take care of your needs, but be sure to not go overboard. Be practical with what you buy, because the insurance company will refuse to reimburse you for frivolous things. For example, if you need a pair of slacks and a dress shirt for work, don't assume you can head to the most expensive suit place in town.

This advance will be deducted from the total amount you finally receive from the insurance company, so be sure not to hurt yourself by going overboard.

2. Make a list of everything you've lost and do not throw anything away

You will want to make a list of everything you lost in the fire. This can take some time and reflection from everyone in your household. You want to be sure to start making this list as soon as you can so that you are able to remember to include everything lost by the time you file your fire insurance claim.

Be sure not to throw anything away. Many people make the mistake of tossing things in their homes that are completely ruined, either by smoke or fire damage. Remember that the insurance adjuster will want to see these things to include them in the coverage. It will be easier to prove that you really lost the items on your list if you hold on to them for the insurance adjuster to see. If you throw them away, the insurance company may refuse to compensate you.

3. File your claim right away and press the insurance company to act ASAP

Insurance policies require policyholders to file their fire insurance claims as soon as possible. Call your homeowners' insurance agent immediately to get the process started. The insurance company will require you to submit a "proof of loss claim". This is the form on which you include all of the items you lost, including their value. Your prompt action is especially important if there were many other homeowners affected by the fire. If you don't act immediately, you could fall to the bottom of the list of policyholders who have fire insurance claims, and it could be a long time before the adjuster reaches you. The following is a list of information to include in your claim.

  1. Date of loss
  2. Type of loss or damage
  3. Location of damage
  4. Any related injuries
  5. Others involved
  6. Condition of the home
  7. Description of damaged contents
  8. Whether or not temporary repairs are necessary
  9. A police report

Dealing with the insurance company is a very convoluted process involving countless calls, emails, letters, and documents. Be sure to keep track of all communication and keep a copy of all documents and post office receipts of mailing. Take notes, including the date and time, of every phone conversation and face to face meeting. Getting a binder or file organizer is a great idea. This will allow you to section off the different types of correspondence--organizing phone call notes, emails, invoices, bills, permits, contracts for repairs, and insurance forms each into their own separate section. Remember to always keep original documents of everything. If your insurance company wants proof of a document, make them a copy but keep the original. The more organized you are the better prepared you will be should your insurance company start playing the "he said, she said" game with you.
Since you are acting promptly to fulfill your responsibilities of the policy, your insurance company should also be prompt in acting on your fire insurance claim. Indeed, the law requires insurance companies to handle claims in a timely manner. Most states give insurance companies specific timelines.
For example, California requires insurance companies to send out a "notice of intentions" within 30 days of receiving the fire insurance claims. If there are no issues or disputes with your fire insurance claim, they must send you payment within that time, as well. If your insurance company is taking too long to get back to you, write them and let them know that you are sending a copy of the letter to the state's Department of Insurance. This should prompt the company to act, as they will not want to make a mistake or drag their feet if they know they are being monitored.

4. Secure your property to mitigate damage

The insurance company will require you to take reasonable care of your property. Therefore, be sure that you secure your property from further damage. If something is a total loss, of course, this is unnecessary. However, where only one section of your home is damaged, be sure to take proactive measures in preventing further damage. Insurance companies call this "mitigating damage," which just means reducing the amount of damage. Ways to mitigate damages include

  • Covering holes in the walls and roof to protect from the elements
  • Boarding up or building a fence to prevent looters
  • Smoldering all embers
  • Moving property that is at risk of further damage (for example, moving the unharmed television out from underneath the hole in the ceiling).

5. Keep track of your living expenses

Your insurance policy includes a clause called "loss of use," which means that the insurance company reimburses you for your living expenses while displaced from your damaged home. Note, however, that you are only entitled to the difference between what it costs you while displaced and what it was costing you in your home. For example, if your monthly living expenses are $4,000 per month, but now you are having to add hotel stays, restaurant meals, laundry expenses, and extra gas for your car, totaling an additional $1,000, your insurance company will only reimburse you the extra $1,000 per month.

Many people decide to stay with family members or friends instead of at a hotel. Sometimes, the insurance company will reimburse your hosts for the additional costs of your stay. Ask your host to itemize the additional costs. Take extra care to be reasonable and not frivolous, and be patient with your insurance company should they want to negotiate with you for this cost. Politely remind the company that you are saving the company a great amount of money in hotel and restaurant expenses by staying with loved ones.

6. Get the right repair estimates and keep receipts and documentation to everything

Filing fire insurance claims enables you to repair or even rebuild your damaged home. "Actual cash value" policies entitled you to the amount it would take to return your home, including its contents, to its pre-fire fair market value.

"Replacement" policies entitled you to the amount it would take to replace the home and its contents, regardless of the value of what you lost. "Replacement" coverage does not require you to actually rebuild your home on the exact same lot. You can choose where you want to rebuild. So, long as it is the same value as your old lot, your insurance covers it. Of course, if you move to where property is more expensive, you will end up paying the difference. If you decide not to rebuild, but to invest the money in something completely unrelated, like a business or college fund, the "replacement" policy will become an "actual cash value" policy, providing you with about 15% less.

The insurance company will require an estimate of the fair market value or cost of replacement of damaged property before the fire. Insurance companies will send out their own adjusters, but remember that these folks work for the insurance company and so will make decisions in the insurance company's best interest, not yours. You do not have to accept the numbers that they throw at you, so it could be best for you to hire your own independent estimator or contractor.

The estimator or contractor you hire is being paid by you and therefore is looking out for your best interest, not that of the insurance company. Do not accept any amount from the insurance company unless you are certain it is what a buyer would have paid for your home and its contents just before the fire.

Be sure to be picky when choosing a contractor. Choose one who is not only good and experienced in building, but also is experienced in how insurance companies handle issues. Before you agree to commence any work, be sure that you and the insurance company are in agreement regarding the scope of the work to be done.

7. Keep paying your insurance premiums

Many people make the error of discontinuing their insurance premiums once they've filed fire insurance claims. This is a huge mistake. Your homeowners' insurance includes liability protection for your home, including pets. So, if Spot, upset by the disaster and sad demeanor of the household, chews up your expensive sofa, you're covered. If you stop paying your premiums, the destruction from Spot's puppy aggression will not be covered.

Also, remember to give your insurance agent the new address of where you're staying and have that added to your liability coverage. To reduce your premiums, you can also ask that the section of the policy that covers the structure of your home be cut back, in the case that your home was a total loss. Just be sure to adjust this after your new home is built.

8. It's not over until you say so

Insurance companies are quick to close fire insurance claims, especially in mass disaster situations. The longer your claim is open, the greater chance for you to discover something you overlooked previously. This is actually a common occurrence. In such a stressful and confusing time, it is likely that you may forget to list an item of value in your initial insurance claim. Give yourself some time. Protect yourself by waiting a few months before consenting to closing your claim. You do have this power.

Insurance companies will try and slide in a claim closing by adding language to your check. When they send you your check, they may say something like "acceptance of this payment will close your claim." You do not have to accept this. Cross out the language, sign or initial next to it, and send them a letter thanking them for the payment, but asserting that you do not consider the claim closed.

9. Consider hiring a public adjuster

Even if after hiring your own independent estimator or contractor you are unable to reach an acceptable settlement, consider hiring a public adjuster. This is a person you pay to negotiate with the insurance company for you. Some people fear doing this because of the extra cost--you pay the public adjuster between nine and fifteen percent of what the insurance company ultimately pays you. This can be worth it, though, if the adjuster succeeds in getting you significantly more than you would have otherwise received. You can find a public adjuster on the National Association of Public Insurance Adjusters' website at www.napia.com.

10. Don't worry about losing your insurance coverage

Too familiar with automobile insurance companies raising premiums or completely dropping drivers, many people fear that filing fire insurance claims will cause their homeowners' insurance company to do the same. This is not the case. As long as you file only legitimate claims after real disasters, you are not a "habitual claimant," and there is no evidence of fraud on your part, your premium will not increase and you will not lose your coverage.

For more information the following websites are extremely helpful to victims who need immediate help and answers:

  1. United Policyholders at www.unitedpolicyholders.org, is a nonprofit organization that gives advice specifically on fire insurance claims.
  2. Insurance Information Institute at www.iii.org, is a news site with specific advice on how to file claims.
  3. Your state's Department of Insurance is always a great place to find information for consumers that target disasters in your state.
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