First Steps in Recovering Following your Fire Loss

Your home and all of your property have been destroyed by fire. The personal toll and sense of grief is overwhelming.

That will take time to resolve and in the meantime, you need to house and protect your family.

What next?

Your immediate concern is finding housing for you and your family members. Assuming that you had a homeowner’s policy your insurance company is required to provide you with up to two years of temporary housing. So one of your first steps should be to obtain a copy of your policy and review your benefits and policy limits.

Once you have that policy you will be able to review your policy limits and determine the level of monthly payment that the insurance company will make for that temporary housing and then begin your search knowing what you can afford.

Fast forward to you having a comfortable short-term place to stay. Now you confront the reality that you have no clothes; no toiletries; no computer.

What to do?

A key term of California homeowner’s policy — Replacement Cost Coverage is an optional coverage found in most homeowner’s policies. Under this term you are entitled to replace whatever you lost with a brand new item of equivalent quality and the carrier must pay for that item in full. So go shopping for the clothes; toiletries; computer and anything else that you need and keep your receipts and submit them.

As soon as you are reasonably settled begin to make an inventory of everything that you lost in the fire. That includes absolutely everything—whether you used it or not. All of your clothes; furniture; kitchen contents etc. should be listed.

As discussed above, you are entitled to full reimbursement for whatever you replace.

Are you required to replace items in order to be reimbursed? No—the insurance company is still required to pay you for the value of the items that you choose not to replace—that’s why a complete inventory is so important.

A common misconception is that the insurance company can simply pay you “garage sale” value on items that you don’t replace.

California law instead requires the insurance company to pay you based upon the actual physical condition of the property.

So if for example, you have a dining room set that you rarely used, or a sofa—even if 10 years old– if those were in excellent condition then you are entitled to payment at that level. Some companies will try and just apply straight-line depreciation to your older items and say that anything over 3 or 4 years is essentially worthless—don’t let them.

Insurance Code Section 2051 requires the insurance company to take the actual condition into account. What’s more, the company is required to share with you exactly how it came up with the value and how it depreciated your property.

Once you have inventoried, replaced, and claimed for your personal property and settled into your temporary housing you can begin to consider your options for rebuilding your home or selling your lot and moving.

There are advantages and disadvantages to each of these. We will cover this in a later post.

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