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Don't Get Burned by a Fire Insurance Claim

Most of us don't spend a lot of time thinking about what we would do if our homes catch fire. And even fewer of us consider what we would do if our insurance companies denied our insurance claim for such a loss. But these things happen all the time. This article outlines steps that a home or business owner should take be in the best possible position to get the highest quality of service from your insurance company.

Before the Fire

Save your receipts and manuals
When making a claim for your personal or business possessions, the first thing the insurance company is going to ask is proof of age, ownership, and value. People often throw away their manuals for things such as televisions, appliances, and electronics. A good habit is to staple receipts for purchase and keep them filed away in a fireproof safe. These documents prove ownership as well as the exact year, make, model, and cost of the property.

Photograph your possessions
A picture is worth a thousand words - and in the case of an insurance claim can save you thousands of dollars. While it is not necessary to photograph all possessions, an annual snapshot of the rooms in a home or business will be useful for establishing a claim. For the best results, stand in the middle of each room and take photos of each corner. Take a photo of closets and high value items stored out of sight. Take photos of what is stored outside. Keep these photos where they can be accessed after a fire - cloud storage services like Dropbox, OneDrive or iCloud are great places to keep these photos!

Review your coverage amounts
People often don't realize how many things they have. Take half an hour to walk through a home or business to obtain a rough estimate of the cost to replace everything. Compare that amount to the amount of coverage you have under your policy for your contents. Talk to your insurance agent if your policy doesn't provide enough coverage to replace your belongings.

After the Fire

Do whatever you can to minimize the loss
Call 911 right away upon notice of a fire. If possible, safely put the fire out with an extinguisher, water, or other means. But never compromise individual safety. If the firefighters need to enter through a window, cover the opening with tarp after the fire is extinguished. An insurance adjuster should be able to tell you what to do to keep your home or business protected to prevent further loss. An adjuster should be able to recommend reputable service providers. If you don't take necessary precautions to protect your property from further damage after the fire, then the insurance company may not pay for any additional damages.

Contact your insurance company immediately
Every insurance policy requires policyholders to report losses in a timely fashion. This means that after you call 911, your next call should be to your insurance company. The insurance company will want the opportunity to document the loss and manage the repairs in the most economical way possible. This is an issue for smaller fire losses. Many times people will attempt to make repairs themselves and find the repairs are more costly than anticipated. Insurance companies often underpay these claims because repairs could have been made more economically. The insurance company could argue it did not have the chance to validate the fire was caused accidentally or the property loss was not properly documented.

Document everything
It is important to document everything about the fire loss, including:

· When the fire started

· The cause of the fire

· Who was present during the fire

· Who witnessed the fire

· Where you were at the time of the fire and for how long you had been away

· Everything lost in the fire

· A claim number and adjuster contact information

· The names, dates, times, and numbers of who you spoke with as well as the subject of any conversations (adjuster, firefighter, witnesses, cleanup companies, etc.)

Finally, be sure to photograph everything that was damaged - both outside and inside before the firefighters or cleanup companies remove it.

Make an Inventory
The insurance company will always require inventory for lost items. In every room, note owned items, the original cost and its age. Note the brand, make, and model if the items were luxury items. An adjuster will value "a purse" differently than "a Louis Vuitton purse." Be sure to note if the original items cannot be recalled. Always include a disclaimer stating the right to add to the list if other damaged property is discovered. The claim will be based upon the contents inventory along with other documentary evidence.

Buy the things the insurance company pays for
Most insurance policies are written on a replacement cost ("RC") basis. Replacement cost is the term for valuing an object by determining what it would cost for you to buy a replacement object of like kind and quality. Actual cash value ("ACV") is the RC minus the cost of any depreciation. The replacement cost can be different than the ACV.

It is important to understand insurance policies will pay the ACV for the lost items and then pay the remainder of the RC only after you've purchased a replacement. For example, assume a fire destroys your 10-year old blender. The insurance company will pay you the depreciated value of the blender, and will pay you the remainder of the replacement cost after you actually purchase a new blender. So the insurance company may only pay you $20 for your 10-year old blender, and you may have to spend $80 to replace it. After you replace it, the insurance company will pay you the $60 difference. But if you don't buy a new blender, you won't get anything other than the original $20. Save all of receipts from any replaced items. Insurers only allow a limited time for replacement purchases, so purchase the property quickly.

When All Else Fails

Insurance adjusters are naturally skeptical, particularly of things that do not meet their expectations of a claimed loss. Their skepticism can result in an unreasonable denial of insurance benefits or lengthy investigation. The signs of this are usually clear:

· You may stop hearing from your adjuster

· You may hear from a completely different adjuster or special investigator

· You may get a "reservation of rights" or "non-waiver" letter in the mail.

If you experience any of these signs or believe that your insurance claim may be denied, call an attorney to review your claim and protect your rights. Roeder Smith Jadin, PLLC can help. Call today for a free consultation.

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