The devastating Marshall Fires have had a lot of homeowners thinking - what can I do to make sure that this doesn’t happen to me?
While fires and other natural disasters are unavoidable, there are steps you can take to ensure that if your home is in the path of a disaster, you are prepared to take action.
Schedule a Full Policy Review
A full policy review should be done at least once a year, as well as after insurance qualifying events. This can include a change in family status/size, retirement/aging milestones, professional changes, and changes in living conditions.
“With the huge increase in building material costs in the last few years, if you have not reviewed your policies in a while you're very likely under-insured,” said insurance agent Kyle Semler of Colorado Insurance.
Here are a few items on your policies to pay attention to, according to Semler.
Dwelling A Coverage - This is the amount your home is insured for. This amount will almost always be less than the market value of your home because the market value of your home also includes your land value. Insurance does not insure your land value, it only covers the cost of building materials and labor to rebuild your home in the case of a total loss, so don’t be alarmed that your coverage amount is less than the market value.
Extended Replacement Coverage or Additional Replacement Coverage - This is a rider you can add to your home policy that will increase the Dwelling A amount by 20%, 25%, 50%, 75%, 100% depending on your insurance company, please always max this out, it's very inexpensive. This is an additional level of coverage used as a buffer in case your Dwelling A coverage comes up short. Some companies (Nationwide Insurance, Auto Owners Insurance and Chubb Insurance) also offer a rider called Guaranteed Replacement Coverage. This gives you unlimited coverage to rebuild you a home of like kind and quality in the case of a total loss. If your insurance company offers this coverage please add it.
Loss of Use - This pays for you to live somewhere else if you're displaced from your home for a claim. Most companies max this out at 24 months. Many of the homes lost yesterday are going to take at least 24 months to rebuild since almost 600 need to be rebuilt. Please check your policy and max this out, it's also very inexpensive.
Personal Articles Floater (PAF) - Most home insurance policies have very limited coverage for high value items, firearms and jewelry. Most companies max out at $2,500. If you have any of these items you need to add a PAF to your policy that will specifically cover these items for their full value. You will usually need an appraisal for each item.
If you are considering buying a home or are thinking about finding a new insurance agent, consider using a local agent. A local insurance company will know the best deals in your area, and has an understanding of the location-specific risks your area faces, such as fire danger in Colorado.
Take Inventory Around Your Home
Another thing you can do today to prep for an insurance claim is to take inventory + document the belongings in your home. “If you do experience a total loss scenario it will save you and your insurance company a ton of time getting you a check cut for your personal property if you can show documentation vs. guessing. Pay special attention to high end items when you document. If you have a couch that is worth $10k and you want that couch back you're going to have to prove it to your insurance company,” said Semler.
Not sure where to start with documenting? West + Main Homes agent Dave Christie recommends using an app like Homezada to document your belongings. By using an app, you can ensure that your documents are kept in one place and will still be accessible if your phone is lost.
Have more home insurance related questions? Contact us.
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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.
