With the tragedy of the San Bruno fire in Northern California, I started to wonder, what are people to do if they suddenly find themselves without a home? I'm kind of embarrassed that I don't automatically have an answer for that, considering the topics we cover.
I hope everyone will forgive me. I don't pretend to be an expert in insurance, but I did my homework.
People familiar with my writing, probably know that I had a childhood that was cynically full of disaster. I've seen a fire at home, floods, hurricanes, tornadoes…but still nothing that completely destroyed the family home. We'd often be very uncomfortable, but never so bad off that we couldn't stay there after a disaster.
Many people aren't that lucky. Homeowners insurance (and renters insurance)is a wonderful thing. Most policies cover more than I thought. Policies may be a bit different from each other, but for the most part, almost all of them cover living expenses for 18 to 24 months if you lose your home.
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That means everything, from clothes, food, and pots and pans, to hotel costs and rent and deposit for an apartment. In most cases it will even cover mileage expenses traveling to and from your temporary lodging. Every insurance agent who agreed to speak with me about it said it was absolutely imperative to keep your receipts. No insurance company will pay anything of course, without proof.
I asked about everything. Toys for the kids? Within reason. Jigsaw puzzle to keep grandpa busy? Sure. Dog bed for the pooch? There was a pause.
My dog, I explained, only likes to sleep two places: his old dog bed, or next to unsuspecting family members, often the ones most prone to getting itchy from dog hair. Any other temporary measures seem to fail, as I tried to prove in this photo.
"Just keep your receipt," he said to me.
However, I was also told, if I suffered a total loss, I could expect the insurance company to write a big check to get me started, often in the ballpark of $15,000 to $20,000, as all these expenses in establishing a new place to live can be rather pricy.
Last, and maybe most importantly, agents told me one of the biggest problems they encounter is that homeowners policies aren't reviewed often enough. Often in the course of a mortgage, say 10 to 15 years in, home values often appreciate beyond the bounds of the coverage that is initially purchased, and can often leave a home underinsured.
It's good to review your policy from year to year, and weigh it against the total cost to rebuild your home. Your policy limit may not cover this, so it's a good idea to get an estimate from a contractor every few years to get a good benchmark of what your policy limit should be. Raising your policy limit is not that expensive and not that hard, and could very well save you from a nightmare if you find yourself facing a total loss after a serious disaster.
