Proper insurance coverage is crucial to the financial well-being of a family or business when a disaster occurs. Accidents resulting in property losses happen every day, albeit at varying degrees.
Understanding insurance coverage and how a policy protects a homeowner is often mind boggling. When I worked in insurance, I constantly looked up state statutes and references to help in my daily work. I no longer work in insurance, and now I rely on my agent who touches policies every day to explain insurance language to me that I don’t understand.
Let me explain why I am obsessed with proper insurance coverage. When we bought this dream home in 1994, we were like many young couples who paid their insurance bills as a responsible young couple trying to protect their family. Three months into enjoying our new home, the unthinkable happened. I had just finished bathing my little ones, and we had come down the steps. Right then, the doorbell rang, and I told my husband I could hear his pager going off upstairs. We did not have cell phones back then. I opened the door and a woman calmly told me our house was on fire. I stepped out the door and looked at our roof. Yes, the house was surely on fire. The noise was not my husband’s pager. It was the smoke alarm. The inner and outer chimney pipes of the wood burning stove had broken, catching the roof on fire. We had no idea, nor could we have known. I yelled to my husband the house was on fire, put the coats on the kids that were at the side door, and out we all went to a sky of red. Quite a way to meet all the new neighbors.
We were lucky. The fire happened on a Saturday night and the members of the volunteer fire department were all in town. In 1995, it was $25,000 worth of damages because of the way the fire broke out and the responsiveness of the fire department. As we had a mortgage on the house, I am going to surmise we were properly insured, at least for the physical property. However, I could not say whether we had enough coverage if the damage was worse. I do remember I was allowed to work off our $500 deductible with cleaning activities. We did have one very important element in place, we had replacement value insurance. More on that topic later.
Needless to say, this made us think about our insurance coverages to a greater degree. When we switched to a new insurance agent, he helped us purchase the best policy for our needs. The result was that we had appropriate insurance to cover the losses of a much larger fire that occurred 21 years later.
I want to share with you a few basic but important suggestions to consider about your insurance and fire prevention.
- If you don’t like your insurance agent/agency, find a new one
Seriously, you need to trust your agent. We happen to love our agency and have been with them over twenty years. We are glad we made the switch. They know us and we know them. They made sure that we were properly insured. I can’t tell you how many people double checked their coverages and limits as a result of our fire. You are purchasing a product (insurance coverage) that is absolutely necessary to safeguard your family’s financial security. If you currently purchase insurance on your own, consider an agent. They have expertise and it is valuable.
- Understand your policy and coverage
Every insurance company has state guidelines to follow, but that does not mean every policy is the same. Ask questions. Your agent’s job is to answer any questions you do not understand. There are requirements for physical property insurance, which include the home and structures. There are also requirements for personal property, such as clothes, books, and other possessions. Your agent will work to make sure you are properly insured for your financial situation.
- Ask about Riders for expensive and rare items
As an example, I had a separate rider for my orchestral flute. The flute was heavily damaged. I had picked it up only one week prior from having a long overdue complete overhaul. If I had not had a rider for the flute, the insurance company limits would not have been enough to have another overhaul. Keep rider limits current. The rider limits on my flute were enough to have it fixed, but not replaced. I quickly had those limits updated. Many people list jewelry, firearms, and expensive artwork. Have a discussion with your agent on how items such as custom wheelchairs or other medical devices are covered.
- Cash and gift cards
Most companies only cover very small limits of cash and gift cards. The bank can help with damaged bills, but there are rules to how much of the bill must be intact for it to be replaced. The Bureau of Engraving and Printing (BEP) is the resource for bills considered mutilated. They can help with bills that are too damaged for bank assistance.
- Have your premium payments paid automatically
This will save you so much stress in the event the unthinkable should happen. I switched to this method of payment after our fire in 2016. The payment is withdrawn from our bank account automatically. I never want to worry about making sure my premiums are paid again, not even for a split second.
- Have a fireproof box for your important documents
This is one item we had that we purchased after our first fire. I am ashamed to say I did not have it latched well because it was full, but it was closed enough that all of the paperwork survived. I can live with a little soot. Soot is now part of our story. Fire and waterproof boxes are very reasonably priced and readily available. I have seen them at Target and Staples. They are worth every penny. Replacing documents is its own nightmare.
- Have a fire extinguisher on every level of your home and make sure it is not expired.
Kidde recently had a major recall of some of their fire extinguishers. Make sure yours is not on that list. We bought a new one for the apartment we lived in after the fire and it was on the list. They replaced it without hassle.
- Have a plan
Have a meeting place and practice fire safety. You cannot go over fire safety practices too many times.
- Provide fire ladders
Fire Ladders should be provided for upstairs bedrooms where there is no other way out but a window. When our daughter went to school in Pittsburgh, she was on the fourth floor in a very old home. The ladders provided were inadequate and there were not enough for each girl that lived on that floor. These are available online and I have seen them at Home Depot. They come in different lengths. Make sure the occupants know how to use them.
- Understand replacement value
There is a difference between Actual Cash Value (ACV) and Replacement Value (RV). Actual Cash Value refers to what an item is worth today. Replacement Value refers to the value to replace the item. For instance, if you had hardwood floors in your home and suffered a flood, Actual Cash Value coverage will only provide funds for the floor’s value today. Actual Cash Value coverage may leave a homeowner financially short when it comes to repairing a home. This will undoubtedly create friction between you and your adjuster if you are expecting them to replace the floor. On the other hand, Replacement Value is designed to provide the funds needed to replace the floor you had originally. Actual Cash Value and Replacement Value also pertain to all personal items, such as furniture, clothing, and all other personal property.
There are resources for home owners and business owners to ensure their assets are properly covered. An agent is a great place to start to have your questions answered. The time and effort it takes is worthwhile. Peace of mind is priceless.
Copyright 2019 Lisa Jilbert
wahldunhouse.com 