Sally Ho
Seattle (AP) – One thing to repair a home after something basic is wrong, but after a large natural disaster destroys multiple properties on your street, neighbourhood, or entire area. It is another beast that will rebuild and recover.
Wait until you enter crisis mode. It is important to understand your interests and rights when it comes to home insurance in the event of a widespread emergency.
What coverage is important
Insurance is intended to cover what you lose, but that can mean two very different things.
If you do nothing else, check the policy now to see if there is “replacement cost value” compensation. This is the comprehensive standard, granting you the amount you need to replace something you lost in a major disaster, such as a wildfire.
If there is compensation for “actual cash value”, then the dollar limit listed is intended solely to cover the value of what you have lost.
Amy Bach, a policyholder with consumer advocacy group United, says the two are apples and oranges in terms of payments. She explains: “The actual cash value is the price of Craigslist, not the cost of replacement.”
Early Advanced Payments
From finding a new place to live, to buying clothes and toiletries, survival in the immediate aftermath of an emergency is expensive. So be familiar with state laws that regulate insurance companies on advanced payments.
For example, in California, which has some of the nation’s most powerful consumer protections, insurance companies are equivalent to up to $250,000 or 30% of the policy’s housing coverage limit if a state of emergency is declared. You need to pay quickly. The home is known to be a complete loss. This is considered an advanced payment. This means that homeowners do not have to itemize all of their belongings that were initially destroyed or wait for the adjuster to access the property’s site.
If you are unable to connect with your insurance company, look for an emergency response center in your community. You may also have information on whether other aid, grants, or grants are available in combination with insurance benefits or apart from other insurance benefits. Local businesses may be there to offer freebies such as furniture and clothing.
Think about the rebuild timeline
Depending on how widespread the disaster is, it could be evacuated for months or even years. In the case of a major wildfire, cleaning toxic combustion sites can take as long as it is a whole new construction effort.
And during that time you have to continue paying your mortgage on real estate that you cannot occupy.
Property insurance generally refers to living expenses while evacuating as compensation for “loss of use.” This is also known as “additional cost of living” or “fair rental value.”
Check out this line item and ask yourself if there’s a good way to pay both a mortgage and a temporary rental.
Original issue: February 6, 2025, 1:09pm EST
