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Prepare Yourself For Catastrophes To Your Home

By Erik Folgate

My thoughts and prayers go out to those who have literally lost everything they’ve worked for out in California. A house is your biggest investment, and the sentimental belongings such as wedding photos, important documents, and family heirlooms are irreplaceable. The only consolation I could offer up to someone who had their home swallowed up in a fire is that life is about much more than accumulating stuff, and you ALWAYS have to be thankful for being alive and healthy.

I was watching Good Morning America this morning and they had their financial consultant on the show, Melanie Thompson? I can’t remember her name. Anyway, she did a very good segment about steps to take to be prepared for the worst. The worst is your house burning down or being blown away in a tornado or hurricane. I’m talking about your house being completely blown away or burnt to the ground. There are people’s houses being burnt to the ground as we speak, and they are losing all of their important documents that would have helped them to gain everything they deserve when they file an insurance claim. Here are a couple of tips for being prepared to file a homeowner’s insurance claim and receive everything you are entitled to if you need to file a claim.

  1. First of all, take a deep breathe when thinking about a fire loss. Fire is your friend when it comes to filing an insurance claim. It’s horrible, because it destroys irreplaceable items, but insurance companies will VERY RARELY give you problems with covering the loss and paying to replace damaged property and personal contents. There’s not a policy in America that doesn’t pay for fire. If it doesn’t include fire, you must be buying it from some guy living out of a car.
  2. Document, Document, Document. Insurance companies want great documentation. They’ll ask for proof of your most important and expensive itiems. The best thing to do is take photographs or a video of your contents. Have hard copies of your inventory, photos and/or video. Then, make it electronic and upload your photos or videos to an external website. Your experience with the adjuster will be much smoother and more pleasant if you have good documentation. Otherwise, they are going to pay you based on average prices, and that doesn’t fly if you don’t have average stuff!
  3. Keep the most important documents you own all together, so you can make one quick grab in the event of an extreme emergency and you don’t have time to search for all types of different documents. You’ll think I’m crazy, but you don’t NEED to have a copy of your policy with you. You don’t even need to know your policy number. Insurance companies are sophisticated, so don’t run back into a burning house just to look for your policy information. Melanie suggested having a copy of your recent utility bill, because it’s the universal way to show proof of ownership of the house.
  4. Meet with your agent once a year to evaluate the replacement cost of your house if it were to burn down. Let’s say that you bought your house 10 years ago, and you insured it for $100,000. Your policy may have an inflation guard, so it has increased the coverage by 3% each year. But, we both know that property values go up more than 3% a year, and so do building costs. Take the time each year to evaluate how much it would cost to rebuild your house in the event that it burned down. You may have $100,000 in coverage, but it may cost $120,000 to rebuild your home. Your policy is only required to pay the policy limit in the event of a total loss. Also, take into account additions and renovations. If you increased the square footage of your home, then you need to account for that with an increase in your coverage limit.

Hopefully, you’ll never have to go through something like thousands of people are going through in California. But, the fact that it’s a possibility should give you the motivation to be prepared if it does.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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