Fire insurance claims can happen all too often. Partly, this is because of circumstance - for example, Thanksgiving Day is the number one day for fires in the home. Another reason is natural disasters. By late August of last year, 2012 had already claimed the title as the worst year for wildfires in the United States and many fires resulted from Superstorm Sandy in our own area. So what do you do if you find yourself needing to file a claim with your insurance company because of fire damage?
At the Fire. The first thing to do after you and your loved ones are safe and the local fire department has arrived is to call your insurance company. You need to file your claim immediately. As soon as you can, submit what's called a Proof of Loss claim. Take pictures, make a list of the property that was damaged and get any reports from the fire department and police. Simply put, the sooner you get this information to your insurer, the faster its reaction time to your needs, and the faster you will get the financial assistance you're entitled to.
Be aware that at the fire, there may be what is called, a fire contractor or a fire chaser, who will ask to board up your windows and may even suggest repairs on your home. Hold off-don't sign anything until after consulting your insurance company, or an attorney.
After the Fire. Your policy will typically allow you to get an advance from your insurer against the claim. This advance is needed to cover immediate expenses, like the costs for living in a hotel, or to buy clothes for work the next day. But the coverage for those things must be within reason. No Armani suits if you typically wear khakis, or room service at a 4 star hotel.
As the homeowner, you have a "duty to mitigate," which means that you have to minimize your losses as much as possible. For example, you will need to cover the hole in your roof from the fire, instead of later trying to claim additional damage from rain going inside of your house.
Hire your own independent estimator, rather than just relying on the insurance company's adjuster. Measurement of your true damages and the cost of repairs is crucial. If you have an "actual case value" basis for your insurance, you are entitled to the amount of money it will take to return your home to its value before the fire. If you have a "replacement cost" basis, the insurer covers the amount it would take to replace the contents up to a certain amount.
Again, the best thing you can do in filing a fire insurance claim is document everything. It may be a tough thing to do, considering the trauma you and your family have just suffered. But keep records of your expenses. Save receipts. Try to remember all of the furniture and other contents and take pictures of them in their damaged condition. These can be especially important if there is a "loss of use" clause in your policy, because it only covers the difference between what it takes you to live now versus what it took you to live before the fire.
A fire in one's home can be devastating, and the process to repair the damage is usually difficult. But if you follow these steps, it will help ease the transition back into normalcy.
With assistance from Angela Yu, Rutgers School of Law & Rutgers Business School.