The hundreds of homeowners and business owners in Northern California who lost nearly everything in recent wildfires that roared across the region now have another massive hurdle to face: filing an insurance claim to cover the damage.
So far, nearly 1,900 home insurance claims have been filed through State Farm alone due to the California wildfires. In 2014, around 5.3% of insured homes in the U.S. had a valid insurance claim and 97.3% of those claims were attributed to property damage. While most insurance policies do cover fire damage, the coverage may not be as extensive as most homeowners assume. According to CoreLogic, 60% of American homes are underinsured by about 20%, on average. For those who live in high-risk areas, additional insurance coverage may be needed to cover the costs of a total rebuild. And when entire communities are wiped out, those insurance payouts aren’t able to stretch as far, due to the increased costs of labor and materials.
Many California businesses are finding themselves in the lurch as well. The fires destroyed tens of thousands of acres, including a number of marijuana farms — right before recreational sales were set to become legally copacetic. Unfortunately, these owners aren’t allowed to have insurance on their fields, meaning they have no reprieve after losing their $3 million to $5 million investment.
For cannabis business owners, there’s no way to get economic relief from the loss. But for homeowners, there are options. Around 32% of people looking for a new home are first time buyers, but no matter how many homes you’ve purchased in the past, you should understand the conditions of your home insurance. For those who have upgraded their homes, policies may also need to be upgraded to reflect the current value. When an insurer isn’t aware these improvements have been made, it won’t be reflected in the coverage.
Homeowners are also encouraged to plan ahead by documenting their possessions and important financial or personal information.
State Farm insurance agent Donna Randolph explained to a local news station, “Taking videos with phones and capturing that and putting that on your cloud or however you can preserve, that would be a great thing to do,” Randolph said. “If that big thing does happen to you and your family, you can say, okay, look at this. I have all of this captured and it sure makes thing so much easier for you at the end of the day.”
Insurers recommend that homeowners call their agents as soon as they can if they decide to file a claim. They also suggest to save all receipts pertaining to living expenses, as man policies contain what’s known as ALE coverage (short for “additional living expenses) that can reimburse policyholders for the cost of hotel rooms, rental properties, and food after their deductible is met.