Fire Insurance

Are You REALLY Covered? 

In the aftermath of one of the largest, most destructive first in California 's history, one critical question looms for all those whose homes were either totally ravaged by the firestorm or otherwise damaged: Will the insurance carried by those homeowners reimburse them for the full cost of rebuilding? May not!

What about you?

Insurance experts report that many homeowners today are woefully underinsured for several reasons, but the two primary reasons are: 1. Insurance agencies fail to update homeowners policies, and 2. Homeowners neglect to update their coverages to keep pace with the increasing costs of labor, construction materials, and replacement of personal household goods and possessions.

Moreover, many insurance companies have stopped writing policies that guarantee to cover the entire cost of rebuilding a fire-damaged home. Unfortunately, many of the affected California homeowners are now in dire economic straits as they struggle to rebuild their homes, buy necessities, and continue to pay off their remaining mortgages.

Can you afford to rebuild?

All across the country, the per-foot costs to rebuild a home from the ground up have soared far above the replacement cost limits in most policies. Depending on where you live, rebuilding costs can run anywhere form $50 per square foot, to $300 or more.

If you house burned to the ground, could you afford to replace it? Do you insurance premiums automatically increase to keep up with the rising costs of replacement value? Here are some useful tips to determine if you coverage is adequate.

•  Check your policy or with your agent to find the exact replacement cost limit for your home as spelled out in your homeowners insurance. However, you must remember that replacement cost is not the same as fair market value or sale price. This is extremely important.

•  If you policy's replacement cost seems low, ask your insurance agent to increase your limits to not only match today's rebuilding costs, but for projected costs for a few years out. But wait…

•  Before being completely satisfied with your new, updated policy, get several per-square-foot estimates on the cost of rebuilding your home from reputable, licensed contractors.

If you own a much older home and want to change your home replacement policy, you are advised to explore extra coverage for upgrades that might require extensive work to bring your rebuilt house into compliance with new building codes.