When Disaster Strikes: A Wake-Up Call to Review Your Homeowners Insurance
The recent wildfires in California have been both shocking and heartbreaking. It’s devastating to watch how quickly these fires spread, consuming homes, businesses, schools, and beloved community landmarks. Families are being displaced, and communities are being upended in ways that are hard to fathom.
As someone who grew up in Colorado, I’ve seen firsthand the destruction that wildfires can bring. But now, as a real estate professional, the scale of this particular disaster is staggering to me. The cost of rebuilding in areas like Los Angeles, where land values and home prices are already sky-high, is nearly incomprehensible. Add in the losses of personal belongings, priceless memories, and community infrastructure, and the human and financial toll becomes almost impossible to quantify.
And then there’s the insurance. It’s hard not to imagine insurance companies watching this unfold with dollar signs flying out of their accounts like something out of a cartoon. But this disaster is a sobering reminder for all of us: Are you confident your homeowners insurance would have your back if the unthinkable happened?
Why You Need to Revisit Your Homeowners Insurance
Many homeowners think, I have insurance, so I’m covered. But in reality, not all policies are created equal. In a worst-case scenario like a wildfire, gaps in coverage can leave you facing financial ruin.
Here are the key areas to review in your policy:
1. Replacement Cost Coverage
Does your policy cover the full replacement cost of your home? This includes rebuilding the structure at today’s prices, which can be far higher than when you first bought your home. Materials and labor costs fluctuate, and in areas impacted by disasters, prices can skyrocket due to demand.
2. Personal Belongings
Your policy likely includes coverage for personal belongings, but is the coverage amount sufficient? Take inventory of your possessions—furniture, electronics, clothing, appliances, and sentimental items. Remember, these things add up quickly.
3. Additional Living Expenses (ALE)
If your home is uninhabitable, will your policy cover the cost of temporary housing, meals, and other expenses? Many people don’t realize ALE coverage exists until they need it.
4. Natural Disasters Clause
Wildfires are typically covered under standard homeowners insurance policies, but it’s worth double-checking. If you live in a wildfire-prone area, make sure your policy explicitly includes fire damage.
5. Deductibles
Wildfire coverage often comes with a separate deductible, and it’s crucial to understand how much you’d need to pay out of pocket before your coverage kicks in.
Questions to Ask Your Insurance Agent
- Does my policy provide enough coverage to rebuild my home at current market prices?
- What is the maximum payout for personal belongings, and can I increase it?
- Is there a separate deductible for wildfire damage? If so, how much is it?
- What’s included in Additional Living Expenses coverage, and are there any limits?
- Are there exclusions in my policy for fire damage or other natural disasters?
Take Action Now
The reality is that disasters like these don’t just happen to “someone else.” If there’s one thing we can learn from the California wildfires, it’s that preparation is key. Take the time to:
- Review your policy: Understand your coverage limits and gaps.
- Update your inventory: Create a detailed record of your belongings, including photos and receipts.
- Schedule a check-in with your insurance agent: Use the questions above to guide the conversation.
Watching the wildfire devastation unfold is a stark reminder of how fragile our homes—and our lives—can be. As heartbreaking as it is to see families lose everything, it’s also a call to action for those of us fortunate enough to still have our homes intact. Protecting your home, your belongings, and your family’s future starts with making sure your insurance coverage is up to the task.
Now is the time to act, not after disaster strikes. Reach out to your insurance provider today, and make sure you’re fully prepared for whatever the future may hold.
If you’d like a referral to a trusted insurance agent in our area, feel free to reach out—I’m always happy to connect you with someone who can help!