Fire Insurance

Here’s the scene. A new couple has just moved into a nice suburban home. Secured with homeowner’s insurance and ready to take on the world, everything collapses when one stray 4th of July firecracker bursts through the window, lighting a packet of dry paper ablaze. Once the flames settle, all that is left of their living room is a handful of ash and sadness. 

Not to be afraid, their insurance policy includes fire insurance protection. Does that mean that they are to be securely and fully compensated for this disaster? Absolutely not. There are many reasons why families often do not get the adequate insurance protection after fires – mainly, insurance companies significantly underpay the replacement costs of your belongings. So does that mean that insurance companies are evil? Not at all. In fact, the primary reason which causes underpayment is an undervalued claim!

Within most coverages, policies nominally state a personal property clause, extending their coverage to items damaged by perils like fire and lightning. Fire victims commonly underestimate their property’s cash value. Let’s analyze the typical kitchen counter. On top of the repairs to the furniture and countertops, kitchen utensils, tools, and machinery can cost a small fortune. A knife set, silverware collection, pots and pans, and plates can surmount to over a half a thousand dollars.

How can we remedy this mistake? Well, let’s dive back into our example couple previously mentioned. Upon moving into their new home, the first step into security would be to take pictures of belongings and everything valuable. On top of that, extra security would be saving receipts to significant purchases. By maintaining close watch over expenses, the couple can accurately file a claim with exact cost amounts for losses.

And here lies a warning to all claims: Do not abuse the system. Insurance companies will jump at the excuse to deny a claim based on suspicious numbers. $200 toothbrushes and $50 toilet paper does not fly under the radar. On the flip side, be sure to understand your position of power. Insurance companies are bullies – they will occasionally try to push you over. As such, know your rights as a policy holder, and speak with an attorney if you feel underpaid while doing nothing wrong.

Of course, no one ever wishes for anyone's house to burn down; however, in the case that something does occur, you now know how to deal with the pesky insurance business which comes after.