California Personal Injury and Insurance Blog

Is Your Home Protected in Case of Fire?

With wildfire season looming in southern California, and an insurance company making news for failing to honor damage claims that resulted from a California fire, now might be the time to review what would happen to your home in the event of a fire.

 

According to California’s Insurance Commissioner, homeowners should prepare themselves today for what might happen if a fire occurred, which includes both reviewing your insurance coverage and conducting a home inventory of belongings.

 

When you are initially purchasing homeowner’s insurance, describe your home in detail and ask your agent what will happen in the event of a fire. Does the policy cover smoke and water damage? Do an assessment of how much insurance is needed to cover both the structure and its contents. What contents are covered? What contents aren’t covered? You may be surprised to discover that fire insurance sometimes doesn’t cover home business office equipment, professional equipment and tools, or some valuable paperwork. If you need extra insurance but can’t afford the premiums, it may be worth raising your deductible to get the coverage you need.

 

To do an inventory, the Commissioner recommends using a Home Inventory Guide (available here) and a digital camera to catalogue your possessions. He recommends labeling photos and, if using a video camera, narrating the video. I recommend a video camera and then save the videotape in two locations, one of which is outside of the home.  The inventory, pictures, and supporting documentation should be stored in a safe place.

 

When to file a homeowners claim

Houselogic.com has a new article on when to file a homeowners claim. Regular readers of my blog will not find anything new on this, but there is some information worth passing on:

1. Read your policy carefully, then get repair estimates to determine if the cost to fix the problem exceeds your deductible, the amount you pay out of pocket;

2. In addition, you should always make a claim—no matter your deductible or the size of the claim—when someone is injured on your property;

3. Homeowners shouldn’t report water damage under $10,000 because some insurers will give notice that they’ll be canceling your policy at the time of renewal due to concerns about mold;

4. Filing multiple claims, say two or three over a span of two to three years, puts you at risk for nonrenewal;

5. In most states, they’re required to send you a copy of your policy and identify the language they’re relying on in the denial.

This is a handy reference to keep. Remember, just because a claim can be filed, does not mean it should be filed. And just because a claim is denied, does not mean that it was denied properly. Always consult a professional if you have any questions on whether your insurance company acted properly.

FAQ: Homeowners and Auto Insurance Together?

Q: I have auto and homeowners insurance. Do they need to be with the same insurance company?

A: Need to be? No. Should they be? Yes. Done. Oh wait, you want an explanation too, right? Okay, that is where it gets interesting.

There are some "gaps" in insurance coverage. For example, what if you have a very expensive car seat in your car that is also used as a stroller? If it is stolen, which policy covers it? If you have auto insurance with company A, they will tell you that it is not part of the car and not covered. If you have homeowners insurance with company B, they will tell you it is for the car and not covered. But, if you have auto insurance and homeowners insurance with company A, then it will be covered.

Granted, there are not a lot of times when this comes up, but when it does, it is important to make sure you have the most coverage available to you. Not only do you get a discount from most insurers, but you also get peace of mind in knowing that you have the maximum coverage available.

Single Limit Policy

I have a friend looking for new homeowners insurance. She is changing from a major insurer to a less well known insurer, but in my opinion a better insurer. She then asked me to review the policies and explain the differences. So, I did.

Her current policy has your standard coverages - A, B, C and D. A is the house, B is the other structures, C is the personal property and D is the loss of use. I have written about these coverages before.

Her new policy has a single limit. A, B, C and D are combined into one huge limit. In this case, her single limit is $100,000 more than the current A through D coverages. Why does this matter? For a few reasons:

1. She is getting more coverage for less premium;
2. She can use her coverage in any way she sees fit. So, if she has a total loss and it only costs $300,000 to rebuild her home, she can use the rest of it to replace her personal property or rent a home. She does not have to worry about using one limit up and having extra money in another limit;
3. She doesn't have to worry about tweaking (or adjusting) her limit every few months. She has more than enough coverage now.

If you are looking for new homeowners insurance, ask your agent about a single limit policy.

Your Insurance Review

Have you had your insurance review this year yet? What review, you ask? Good question.

Your auto and homeowners insurance needs may change every year. For example, you may need to increase your insurance coverages. Or, maybe your old car is a year older and it no longer makes sense to carry collision coverage on it. Maybe you paid off a car and you can increase your comprehensive and collision deductibles from $250 to $500 or $1,000. It may save you some money, or you may want to use those premium dollars to increase your liability coverage, get an umbrella policy, or make some other change to your policy.

The summer is a great time to have your insurance review done. Things are usually slower, not just for you, but for your insurance agent.

Before you have your review, make sure to email me for my book, Consumer's Guide to Buying Car Insurance.

Insurance Claims: An Overview of the Investigation

I get a lot of people who have questions about an insurance claim and do not understand why the claim is handled in a certain manner. Sometimes, the potential client has misunderstood. Sometimes, the adjuster has made a mistake. Sometimes, no one knows what is supposed to happen so no one has any idea what is actually going on. So, here is an overview of how a claim should be handled.

A claim is called in to an 800 number. (Some insurance companies take reports only from agents. Some insurance companies take reports online. Most have an 800 number to call.) A representative takes the basic information: name of the insured, policy number, time and date of the occurrence, etc.... The claim is then assigned a number and an adjuster. The caller should get this information on the phone.

When the adjuster gets a claim, the adjuster is supposed to handle the investigation in three steps:

1. Coverage. Is the claim covered? In other words, does the insurance policy have some exclusion that makes it so the event is not covered by the insurance policy. This could be an arson on a homeowners policy or a racing incident on an automobile policy. (Racing in your car on a track is not covered by your auto policy.) The adjuster will go through and determine if there is some reason the policy does not apply to the claim. If the claim is covered, the adjuster goes to step 2. If it is not covered, a denial letter is sent to the insured explaining why the claim is not covered.
2. Liability. Is the insured responsible for the damages? On an auto liability policy, the investigation means whether the insured caused the collision. On a homeowners liability claim, ie a slip and fall, the investigation is similar: did the insured do something to cause the incident or fail to do something to prevent it from happening? If the insured is liable, or partially liable, the adjuster goes to step 3. If the insured is not liable, a letter denying liability is sent to the other party.
3. Damages. What amount is owed by the policy? In a comprehensive or collision auto claim, the adjuster determines the repair cost, or if the repair cost is 80% or more of the replacement cost, then the replacement cost. In a liability claim for property damage, the adjuster makes the same analysis. In a bodily injury claim, the adjuster has to determine the extent of the injuries and the amount that would compensate the injured party for the injuries. This is where most arguments occur. What is a fair amount? How is it determined?

The short version: coverage, liability damages. Repeat. That is the proper method to handling an insurance claim. If you have an adjuster who wants to talk damages without knowing if the claim is covered, be afraid, be very afraid!

In future posts, I will go into detail on these issues and explain in more detail what should be done. 

New Article on Filing a Claim

The Sacramento Bee wrote a story yesterday about the true price of filing an insurance claim. The story, which can be found here, quotes yours truly. The Bee had readers write in with questions about filing a homeowners insurance claim. I then provided answers to questions. While the theme was the recent storm damage in Sacramento, it really applies to anyone.

And if you have a homeowner's claim, you should request my free report on the 10 Biggest Pitfalls in Filing a Homeowners Claim. Just send me an email and the report is yours!

Some advice for Northern Californians

Those of you in Northern California remember this past weekend. For those of you who were not here, you may have seen it on the news. Over 2" of rain in one day in Sacramento. Wind gusts over 60 mph. Horrible weather. (I know, nothing like a hurricane or a tornado, but for us, this was really bad.)

Some of you have downed fences or trees knocked over. You are considering filing an insurance claim with your homeowners insurance. Stop!

A small insurance claim can result in your insurance being cancelled or rates going through the roof. It is a practice known as "use it and lose it." United Policyholders website has a ton of stories about this.

I know the tv news people and folks in the newspapers are telling you to file claims. Well, I won't tell them how to report the news if they will stop telling people what to do with insurance. Deal?

If you are unsure if you should report a claim, call a contractor, get an estimate and then determine what to do. But remember, even if you need a loan to pay for it, it may be cheaper than being uninsurable with your house.

Insurance Premium Flat for 2008?

Reuters is reporting that insurance premiums for auto and homeowners insurance should either be flat or reduce for 2008.

You can thank competition. "Strong competition is forcing insurers to lower their premiums or, at the very least, hold them stable," said Orin Linden, who runs Watson Wyatt's insurance and financial services consulting group in New York. "It's clearly a buyer's market."

Interestingly, this comes as the total damages from the fires in Southern California are tallied. You need to remember to shop your insurance this year, but just don't shop on rates alone. And remember, before you buy or renew your insurance, California residents should get my free Consumers Guide to Buying Auto Insurance by emailing me.

The Pinch After the Fires

More coming out on the fires in Southern California. The Department of Insurance says 40 percent of homeowners do not have enough coverage. WOW!

Interestingly, some fault seems to be placed with the homeowners for not realizing that they do not have enough coverage. Of course, homeowners don't write the insurance policies, insurance agents, people who are supposed to be experts in valuation, do. And they don't insure the homes for enough.

I called 10 insurance agents and asked for a quote. I told them about my house and how much I wanted it insured for. How many gave me a quote based on the amount I asked for? ZERO!

Yet, despite this, homeowners are being blamed. Maybe the insurance companies need to take some blame for not valuing the homes properly!