When wildfires wiped out entire neighborhoods in California (and probably other places), many homeowners found that when they started rebuilding their homes, that their insurance payments DID NOT COVER REPLACING THEIR HOMES!
In many instances this shortage was in the hundreds of thousand dollars!
This was primarily due to undervaluing their homes for insurance coverage that didn’t reflect major increases in housing prices in their parts of California. A secondary cause was increases in the cost of building materials, and the number of available contractors being stretched by the number of homes burned.
Here are recommendations for wildfire preparedness that needs to be done BEFORE a wildfire, flood, or other home-damaging event.
Tip 1: Conduct Annual Insurance Checkups with your insurance company. Discuss your policy limits and coverage, and make sure your policy reflects the correct square footage and features in your home.
Tip 2: Know What Your Policy Covers. Understand if you have a Replacement Cost Policy that pays to replace all your items at current market price, or an Actual Cash Value policy that takes depreciation into account and pays less for aged items.
Tip 3: Update Your Policy to Cover Home Improvements. If you make home improvements, be sure to call your agent or company to update your coverage.
Tip 4: Maintain Insurance. If your home is paid off, be sure to maintain homeowner insurance. Without insurance, do you have the money to rebuild your home?
Tip 5: Get Renters Insurance if you’re not a homeowner. Renters can lose everything in a fire and be left to start over.
Tip 6: Keep your home inventory updated. Recovery is easier if you have an accurate home inventory. Document the contents of your home before a fire or other emergency occurs. Here are some general ideas for your inventory.
A. Videotape or photograph each room of your home. Remember to document drawers and closets, and don’t forget the garage and any detached storage buildings.
B. Describe your home’s contents on videotape or photographs. Mention the price you paid, plus where and when you bought the item.
C. Note important or expensive items. Videotape or photograph all of your electronics, appliances, sports equipment, TVs, computers, tablets, etc.
D. Save receipts for major purchases. Store key documents in the cloud or a fireproof case.
E. Keep your inventory and photos outside your home or in the cloud.
F. Some insurance agents have handy home inventory record books for doing a home inventory. Ask when you do your next annual insurance review.
G. If you do your inventory on your smartphone, be sure to make a copy of that information in a separate electronic storage device not in your home.