If you live in a fire risk area, you must know if you have adequate homeowner’s insurance. It’s not enough to think you have coverage; you have to ask the right questions so that you know exactly what is covered.
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It’s no fun to find out after the fact that you don’t have the necessary coverage to rebuild your home. Not only would you lose your home to a fire, but you’d also suffer financially.
Here’s what to look for in your insurance policies.
Do You Have Code Coverage?
Building code coverage isn’t automatic on an insurance policy. What you normally get when you buy homeowner’s coverage is dwelling coverage. This covers the physical structure of your home. If you lose your home in a fire, the insurance company will likely help you pay for the structure to be rebuilt. They will also pay for the systems to be rebuilt or restructured, such as plumbing and electrical. But, if your home wasn’t up to code when it burned down, you might be liable for the difference in the cost to bring it up to code. That’s where building code coverage comes into play.
Do You Have Replacement Cost Coverage?
If you take out insurance and never look at the value of it again, chances are that your policy is outdated. If you took the insurance out in 1990 and your home burned down in 2000 and you never increased your dwelling coverage, you may not have enough money to rebuild the home in 2000. The cost of labor and materials generally increases each year, which is why replacement cost coverage is essential. This allows you the necessary coverage to rebuild the home no matter the cost today.
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Do You Have Coverage for Additional Living Expenses?
If a fire displaces you from your home, you will need to live elsewhere until your home is built. If you have coverage for additional living expenses, you can take the financial burden off yourself while you try to figure out the next step.
A few of the costs this insurance may cover includes:
- Hotel stays
- Standard toiletries
Make sure you ask about the amount you are insured for regarding additional living expenses as each insurance company has different policies.
Know the Premium
Always ask insurance agents if you are paying a higher premium because you live in a fire prone area. Some insurance companies do charge higher premiums, while others do not. Don’t accept the first quote you get either. Make sure you shop around so that you know the normal costs for your area. Comparing the policies side-by-side will give you an understanding of what is a ‘good rate’ for your area and what is an inflated rate that isn’t necessary.
Always take your time when shopping for homeowner’s insurance, especially if you live in a fire prone area. This means you live in an area that is at higher risk of fire than other areas. Don’t put your financial life at risk just by taking out the wrong policy. Make sure you ask all of the necessary questions so that you have a full understanding of your insurance.
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