ACIC Recommends Homeowners Review Insurance Coverage as Wildfire Season Begins

May 7, 2004

With wild fires raging once again, the Association of California Insurance Companies encouraged homeowners to inventory their possessions and review and update their insurance policies.

“It appears that California could be facing potentially one of the worst fire seasons in the state’s history. We are already seeing unusually early fires striking the state and this may be just the beginning. Therefore, we urge all California homeowners to spend some time and be prepared – just in case,” said Sam Sorich, president of the Association of California Insurance Companies (ACIC).

In addition to preparing for the fire season by following the safety tips and home improvement suggestions that have become standard advice for California homeowners, Sorich noted it is also important for homeowners to know the provisions of their policies and what is covered in order to avoid future confusion.

“Insurers are required by law to disclose the coverage of the homeowners policy when the policy is issued and at renewal and to have the policyholder sign off on those terms,” Sorich said. “However, we know that it’s often human nature to pay more attention to the price of coverage than the actual terms of coverage. We encourage homeowners to take the time to contact their companies or their agents to go over their policies and make sure they fully understand what will or will not be covered in the event of wildfire or other damage and to carefully consider the consequences of not buying the coverage they need in the worst-case scenario.”

Sorich urged homeowners to follow a few guidelines:

1) Ask questions about the differences in policies and make sure you know what you are purchasing.

2) Ask how much the policy will cover to repair or rebuild a home and how much it will pay to cover living expenses during the repair or rebuilding period.

3) Get a solid estimate of how much it would cost to rebuild your home. A good way to get a ballpark estimate is to calculate the square footage and multiply it by local building costs per square foot, keeping in mind building costs may vary from area to area and following a disaster.

4) Make sure your insurance agent or representative knows about improvements you’ve made on you home – a new deck, larger kitchen, etc. – so the policy can be adjusted to properly cover them.

5) Make a list and take pictures or videos of all your personal possessions, everything you own in your home and in other buildings on the property. Keep the list in a safe place off the premises so it won’t be lost should a fire occur.

6) Estimate the value of your personal possessions at current prices and ask whether your policy pays to replace possessions with new items, or if it depreciates the value and pays only a portion of what it will actually cost to replace the items.

7) Check the limits on certain kinds of personal possessions, such as jewelry, and consider buying additional coverage for those items.

“An insurance policy is a contract between the insurance company and the buyer. A little effort now to make sure you understand that contract and are confident that your coverage is up to date will pay off in the long run,” Sorich said.

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