"One day your California town will be on fire. The best you can hope for is that you're prepared to rebuild after it happens."
So says California Western Professor Kenneth S. Klein, in a Los Angeles Times op-ed that addresses the unfortunate state of most homeowners' fire insurance policies, and offers advice on how to ensure that when disaster strikes—and it will—there's sufficient coverage to rebuild an entire home.
According to Klein, thousands of Californians simply do not have enough insurance. Worse, they may not receive much, if any, assistance from the federal government. “FEMA coffers are being depleted from the rising number of annual declared disasters, and federal policy under the current administration seems to change by the day,” he says. “There are no guarantees. Almost everyone assumes they have enough insurance, but they don’t.”
Insurance industry data reveals that for a score of reasons, at least 80 percent of the homes in the United States have less than 80 percent of the coverage required to completely rebuild after a fire.
Klein, who lost his own home to the Cedar wildfire in 2003, explains this glaring discrepancy: “Buried in many California insurance policies is a clause that says the homeowner is the expert on the value of her own home, so if the amount of insurance purchased is not enough, it falls to the homeowner to pick up the difference.”
He continues, “You may say, ‘My insurance provides 125 percent coverage of my home value, so I am comfortable that I have enough insurance.’ Don’t take comfort in that policy. The percentage is pegged to the value of the home at the time of purchase, meaning it can sound like a lot more than it is in reality.”
So, what are homeowners to do? In the op-ed, Klein offers a step-by-step process to make sure that they’re fully covered, including how to effectively communicate with insurance brokers/agents, and where to keep records of said correspondence.
To read more, visit: http://www.latimes.com/opinion/op-ed/la-oe-klein-fire-insurance-20171020-story.html.