Home Fire Damage and Replacement Value
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Home Fire Damage and Replacement Value

  • April 11, 2019

Maximizing Insurance Payouts After the California Fires

It is estimated that there are over 13.5 million homes in California, and one-third of those are located in or near areas that are vulnerable to wildfires. Unfortunately, for many of us that live and work in California, wildfires are an annual occurrence. In recent years, however, the fires have caused more devastation, both in terms of loss of life and damage to property. 

California continues to face devastating wildfires, and previous fires have destroyed many homes, businesses, communities, and entire neighborhoods. While homeowners can obtain compensation for losses by filing a home insurance claim, the amount of money that the insurance company provides does not always correspond to the value of what you’ve lost.

There are a couple of different reasons that you might not receive the exact value of your damaged property. Firstly, you may have lost items with sentimental value for which a fair market value simply doesn’t equate to the value you attributed to such items, such as family photographs with little market value. When it comes to insurance claims and fair compensation for those personal items, there is not much that can be done about items with sentimental value. Secondly, you may have opted for “actual cash value” in your homeowners insurance policy rather than “replacement cost.”

Replacement cost is the price of what it would actually cost to repair or replace your damaged possessions at today’s prices without deducting for depreciation. In short, you will be compensated for the amount it will cost to replace the items you have lost with like kind and quality. Actual cash value, on the other hand, means that your insurer deducts depreciation from the overall value before arriving at a figure. If your insurance policy only covers the actual cash value of your personal property loss, you would get the cost of your property minus depreciation, which is likely a lot less.

A replacement cost of your home covers the cost of a damaged home with a similar home, but some insurance companies can limit that at 20 percent over the face value of the policy. This can be particularly difficult in a largely damaged area, which can result in an uptick in price. The supply and demand of contractors have, in turn, sent replacement costs through the roof, causing people to be short on their coverage. Be sure to work closely with your insurance agency to ensure your claim gets settled quickly and efficiently.

Take the time to review your home insurance coverage to be sure you have optimum protection. To find the right coverage for your needs, work with one of our friendly and experienced agents at Falsken & Associates Insurance Agency serving Thousand Oaks, Westlake Village, and neighboring cities in California.