File that Claim
As the fires continued to wreak havoc in our area this past week, I kept wondering what this upcoming blog post should be about. The loss of life. The loss of property. Lives upended but a community coming together to support neighbors and strangers alike. What we've witnessed during this tragedy is too hard to put into words. People more talented than I will come later and put all of this into beautiful prose and poetry. But as a financial planner I keep coming back to the financial impacts associated with this disaster.
As of this writing the estimate is that over 3,000 homes were destroyed locally during the fires, with close to 6,000 buildings destroyed across Northern California. According to Santa Rosa Mayor Chris Coursey, this amounts to roughly 5% of the local housing stock and about $1.2 billion in damage. Housing availability was tight before the fires and who knows how long it will be until much of what was lost is rebuilt. For those without renter's or homeowner's insurance, the road ahead is long. But even for those with insurance, the future can be uncertain and full of challenges.
My post last week dealt with the general concepts of successfully navigating a homeowner's insurance claim. This week, here's my summary of some guidance from the State of California Department of Insurance about the claims process after wildfires. Follow the two links below if you'd like more information.
When going back to your home the first time, use caution. Look out for any hotspots and douse them with water. Also, be on guard for loose or sharp debris. In theory, the authorities have cleared your area for safe return, but not necessarily your house. You can never be too careful.
First, don't wait to file a claim if you suffered a total loss of your home or other major damage. Even if you think you suffered minor damage, or that your damage isn't as much as someone else's and you don't want to clog up the system, you should still file your claim immediately.
I've heard people on the radio talking about waiting to file your claim. There is no meaningful benefit to waiting.
There are several reasons for this. First, your insurance contract likely requires you to do so as soon as possible anyway, so that's simple. Second, your company might ask you to take certain steps, if possible, to protect your property against further damage. Take lots of pictures. Document everything. Third, you want to know what your coverage is and what the company's claims process is, so waiting will only cause more anxiety. Also, you might be eligible for extra reimbursement of additional living expenses if you were subject to a mandatory evacuation. Coverage for this could start cash flowing to you sooner, easing at least some of your anxiety. Keep receipts for everything so you can apply for reimbursement.
Second, watch out for scammers. It's horrible but the bottom feeders come out in droves following disasters. They could be shoddy contractors, door-to-door fraudsters, or others looking to capitalize on your misfortune. Try to avoid these creeps by not rushing into any contracts that require a healthy sum upfront. Contact your insurance adjuster regarding any specific policy and coverage questions. You don't need to use the contractors they send out, but follow their lead as much as possible. The contractor at the door doesn't know the details of your policy and, if they say they do, slam the door. Be sure to check any contractor's license with the state board at 800-321-2752 or www.cslb.ca.gov.
Third, start making lists. If you've suffered a total loss of your home, this is going to be an incredibly difficult process. Even a partial loss will still be hard to document, but start the process anyway. It's probably best to use spreadsheet software like Excel, but the link at the bottom of the page will take you to a home inventory guide. Sometimes it's helpful to look at family photos to jog your memory about what was in your family room, your kitchen, etc. Any kind of documentation helps, but insurance companies in California are supposed to allow for an expedited process following a wildfire ("100 DVDs", for example, instead of an itemized list).
Fourth, remember the difference between home and auto insurance. If your car was in the garage and the garage suffered fire damage, you likely have two separate claims. Typically, your home and auto insurance will be with the same company, so they should prompt you for this information. But if not, be sure to reach out to your auto insurer and get that process started as well. Again, document everything. If your car is filthy and has sustained damage, take photos and file your claim before trying to correct the damage.
Have questions? Ask me. I can help.
https://www.insurance.ca.gov/01-consumers/140-catastrophes/WildfireAfter.cfm
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