Are You Adequately Insured For a Wildfire?

The ongoing 2018 California wildfires have been immensely tragic. Along with the heartbreak of lives lost, thousands of homes and personal possessions have been consumed by the most destructive wildfires in California history.

The Camp Fire alone has taken down 6,400 homes and more than 13 million CA residents are in danger, as fires all around California spread with the strong winds.

Last year, wildfires cost the insurance industry over $12 billion and this year we are on pace to far exceed that.

Given the potential for catastrophe for all homes in California, how do you know if your family is protected through insurance?

There are a few critical items to consider with your current policy:

1. Do I have the right coverage? Your home should be insured to value. That means the dwelling coverage (Coverage A) should be at least $225 per square foot. Often, some homes are underinsured as the homeowner and the agent want to sell the policy at a lower premium. Remember – cheap insurance is not always good insurance, and not being properly insured will cost you much more if you suffer a complete loss due to fire. Your home should also be on the right form. Make sure it is an HO-3 or HO-5 homeowners’ form if it is a single family home, a DP-3 form if it is a rented home or condo and an HO-6 form if it is a condo you live in. Not having the right form could be a cause for denial of coverage.
2. Do I have replacement cost coverage? Check and see if your policy comes with additional replacement cost coverage. In the event of a total loss, this will cover your home rebuilding value the insurance company will pay what it costs to repair or replace your damaged possessions at today’s prices without deducting for depreciation. Often, carriers can add additional replacement cost coverage to cover 150% or 200% of your home’s value to ensure you can rebuild the home properly. If you are not adequately insured based on point 1, then the replacement coverage will not kick in, so again, it is important to make sure you’re not saving on premium at the risk of proper coverage.
3. How is my company’s claim service? During the 2017 and 2018 fires, strong insurance companies such as Travelers, Nationwide and Safeco set up emergency response units at local schools, hotels and community areas to address the claim concerns and general safety of their clients. They assisted police and fire fighters in coordinating evacuations and made sure the policy holders knew exactly what would be covered and how they could recuperate their losses. Make sure you know who your carrier is and what their claims capabilities are. It is important to understand that at the time of a claim, certain carriers might be easier to work with and more supportive of your cause.

If you are unsure if you are currently well protected in case of a fire or other catastrophe, we are here to help. Last year, our agency had two homes lost in the fires; both clients received full payment as promised by their insurance policies as they were properly insured. It is our mission to make sure our community is aware of the dangers of underinsurance during this season. We are monitoring the fires closely and hope that everyone stays safe!