By: Todd Louthain
This past year has been a tough one for my family after losing our home and virtually everything we own to a house fire in June.  I don’t know that anyone could ever prepare for something like this to happen as you certainly never think it could happen to you.  Given what we have gone through I have learned so much and I wanted to take this opportunity to pass along some of that knowledge.  Perhaps with a little bit of knowledge it will make things easier in the event that anything like this would ever happen to you and your family.
  • The first thing you should do is review your policy and know what it all means – for your homeowners policy it will be one of two types, either an ACV (Actual Cash Value) policy or it will be a Replacement policy. The better, but more expensive policy type is the replacement policy.  So what’s the difference?  The ACV policy will cover your loss only at the depreciated value at the time of the loss- the insurance company gets to determine the depreciated value and you have essentially no recourse or ability to prove otherwise.  With a replacement policy you will get paid initially on whatever they determine to be the depreciated value (just like an ACV policy) but once you actually and physically replace your home and your possessions you will then be reimbursed the difference between the depreciated amount and the amount you paid to replace whatever it was that you lost.
  • Be aware and intentional about the policy limits you maintain. You will have several line items on your policy including your primary structure, secondary structures that include any building not attached to the primary residence, contents within the primary and secondary structures and a line item for “displacement” expenses should you be unable to live in or occupy your insured property due to a loss of any type.  These limits are often selected at the time the policy is written but unless you are intentional in reviewing them as time goes on they may not be fully up to date.  The contents portion is often times not accurate because unless you select a specific amount it will just be a straight percentage of whatever the structure is insured at.  As you acquire new things it would be wise to revisit the contents portion of your claim from time to time. It’s very important to realize that whether you have an ACV policy or a Replacement policy, you will not receive any more than your policy limit regardless of how much value you may have actually lost.  Try to take an inventory of what you own and think about what would happen if you lost it all overnight – would the amount you are insured at be enough to replace all of those things?
  • Take time to make an electronic inventory of your home and the contents within. Use your phone and do a walk through video of each room.  Insurance will be very specific after a major loss so for example, as you walk through your kitchen open cabinet doors and video the contents, in your closets- show some specific clothes especially if you are a brand name consumer.  Be deliberate and be detailed as you do a narrated walk through of every room of your house.  Save these individual files in a safe place or to The Cloud – I hope you never need them but if you do you will save yourself potentially hundreds of hours of building a list of what you lost and without having to prove that you actually had those things.
  • If you experience a major loss, look into a business known as a Public Insurance Adjuster. They work for a fee but a good public adjuster will know how to read a policy and then help you to navigate your way to the best possible outcome of an otherwise horrible experience.  We hired a company called Miller Public Adjusters and it was money very well spent as they helped us to recover the maximums allowed by our policy – I don’t think that I would have been able to be successful in this on my own as they know all of the ways to work through a claim and not take the offers initially offered by the insurance company.  The larger the claim the more sense it will probably make to look into hiring a public adjuster.
  • Know your rights and ask questions- lots of them. What I didn’t realize and what they failed to tell me (mostly because I didn’t know to ask) was that everything that was being done would later be charged back to me at a premium rate.  All of the contractors that did the work do so without the need for a bid or an estimate, their rates do not get questioned and once the work is done it will be very difficult to fight the fees charged.  Although I didn’t have to pay these invoices out of pocket the money to pay them came out of the amount that I was insured at.  You can quickly find yourself losing tens of thousands of dollars which comes directly from your insurance policy limits.  Much of this work is going to be things you could have potentially done yourself, hired a contractor of your choice to do the work or taken help from family and friends.   Let me put this in perspective, if your policy limit is $200,000 and your claims adjuster authorizes $50,000 in contractor fees to do a variety of work that may or may not even be necessary then the most you could get back would now be down to $150,000.
In the event of a major loss, be as calm as you can be and don’t be hasty. Let your assigned claims adjuster know that you are to be informed before any work is done- find out what is being done and let them know that you would like to get additional bids before they move forward.  Seek advice before allowing others to do work for you, know that you can hire your own people or do the work yourself.  Don’t compound your loss by helping the insurance company and their network of restoration companies profit from your loss.
This can all be very confusing and I hope that this little bit of information helps you in some way- if you would be interested in learning more please feel free to reach out to me.  I am planning to write a more detailed version of this and if I know that more information is desired by my friends and colleagues it will inspire me to expand on this sooner rather than later.