Insurance Group Answers Consumer Questions Raised by Wildfires

October 23, 2007

After a wildfire, people usually have questions about the coverage provided by a typical homeowners or auto insurance policy. The Insurance Information Network of California offers answers to some of these basic questions.


Q. If my house burns down, will my insurance company pay to have it rebuilt?
A. The typical homeowners policy covers damage due to wind, fire and lightning. So if your home has been completely destroyed by a fire or if the roof has been burned, your insurance company will pay to have your home rebuilt or the roof replaced. It will also pay if flames and smoke have damaged any other part of your home.

Q. I know my homeowners policy covers my house. Does it cover the contents of my home and my garage?
A. Yes. In addition to paying for damage to the dwelling, homeowners policies cover other structures on the premises, such as a garage or tool shed, as well as damage to your furniture, clothes, appliances and other personal possessions up to the limits of your policy.

Q. My home has been so severely damaged that it is no longer fit to live in. We can live with friends for a week or two, but after that, I don’t know where we’ll live. How am I going to pay for all these extra expenses?
A. Your homeowners insurance policy will pay the extra expense of living elsewhere — reasonable costs to maintain your household — until your home has been repaired or rebuilt. That would include the cost staying in a hotel for a while, and even clothing. Be sure to keep your receipts.

Q. Most of my personal possessions are ruined. Is there a limit on how much my insurance company will pay for my clothes, furniture and appliances?
A. The contents of your home — your personal possessions– are covered up to the limit set out in the policy, often 50 percent or 75 percent of the amount of coverage you have on your home, depending on the type of policy.

Q. Why do I need a home inventory, won’t my insurance company trust that I know what I have in my home?
A. A home inventory is valuable because it can be very difficult to remember everything that was in the home. A good inventory, if supplemented with photos, video, receipts, model numbers and appraisals, can help the homeowner get a more accurate settlement in less time, in most cases. A copy of the inventory should be kept in a safe, or in a location away from the home.

Q. Much of my furniture and possessions were badly damaged, can I get rid of them if I have a home inventory?
A. A homeowner should not throw things away until an insurance company representative has had a chance to assess the damage and make a claim report.

Q. My home was vandalized after the fire and my new television was stolen, am I covered?
A. Homeowners insurance policies cover theft and vandalism, so any losses due to looting in the wake of the fire would be paid.

Q. Are there many different kinds of personal coverage policies?
A. There are two basic kinds of coverage for contents– replacement cost and actual cash value. Replacement cost coverage pays for the damaged item to be replaced with a new item of similar quality. Actual cash value coverage, which is less expensive to buy, pays an amount equal to the replacement cost, less depreciation. So if a 20-year-old washing machine is damaged and you have replacement coverage, the insurance company would pay for a new washing machine. If you have an actual cash value policy, the insurance company would pay only a small portion of the cost of buying a new machine, because that machine has already been used for 20 years and would only be worth a fraction of its original cost. Replacement cost policies usually have higher limits for personal possessions than actual cash value policies because the cost of replacing all the damaged items is higher.

Q. What about the house itself? Is the structure insured on a replacement cost basis or will I have to pay for a portion of the cost of replacing my 7-year old roof myself?
A. The typical homeowners policy pays for repairs to the dwelling on a replacement cost basis so that regardless of the age of your roof, the insurance company would pay the entire bill, minus your deductible.

Q. If your home is old, has not been modernized, and is only worth a fraction of the cost of replacing it, would the insurance company pay to rebuild it?
A. People who own such homes usually have a special older home insurance policy. This policy will pay for basic repairs. If the dwelling is not rebuilt, the insurance company will pay the lesser of two amounts: the cost of repairs or the market value of the house, minus the land.

Q. If I have questions about my homeowners policy, where can I get help?
A. You can call your insurance agent, broker or company representative or you can call the National Insurance Consumer Helpline: (800) 942-4242 and ask for the free brochure, How to File an Insurance Claim.

Q. Does my insurance pay for the loss of any trees, shrubs or other plants I lost from the fire?
A. The typical homeowners policy covers trees, shrubs, plants or lawns on the residence for loss caused by fire. Usually insurers will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or lawns. No more than $500 will be paid for any one tree, shrub or plant. Insurance, however, does not cover property grown for business purposes.

Q. Does my insurance company pay for the portion of my home that I rent?
A. A homeowners insurance policy covers the fair rental value of premises less any expenses that do not continue while it is not fit to live in.


Q. If my car is destroyed or damaged from the fire, is it covered?
A. If you have comprehensive insurance, your vehicle will be covered for damage or destruction.

Q. My vehicle was vandalized after the fire — my windshield was smashed –and my golf clubs were stolen from the trunk. Am I covered?
A. If you have comprehensive insurance, your vehicle will be covered for theft or vandalism. So any damage or destruction of the vehicle due to looting in the wake of the fire would be paid. If you have homeowners or renters insurance, your golf clubs would be covered under the personal possessions portion of that policy.

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