I wrote an article for The Valley Business Journal a few months ago titled “Rising Insurance Rates and the California Fair Plan”. Rates are continuing to rise; insurance companies are still in moratoriums and/or leaving the Golden State altogether and many Californians are still being forced to seek coverage with new companies due to non-renewals or the California Fair Plan. I honestly believe that we are starting to see the light at the end of the tunnel, but it’s going to vary with each insurance company. With that being said, I hope you try and refrain from getting your insurance advice from social media platforms. I can’t tell you how often I shake my head when I see someone that has absolutely no idea what they’re talking about, give advice online. Instead, seek referrals from your friends and relatives that have a good relationship with their agent/broker.
There are a number of factors that have led to the predicament we are in here in California, but instead of restating those factors, I thought it would be advisable to explain the Home Insurance claims process to hopefully help you in the future.
First, I would suggest that you contact your agent’s office directly and determine if a claim should be filed. In this day and age of higher deductibles, you’ll not only want to know if a claim is covered or substantially above the deductible, but you will want to confirm that the amount of the potential claim is worth the possible premium increases. For example, let’s say your deductible amount is $2,500, and your claim is likely to be $5,500. Is it worth taking a chance on excessive surcharges that will be much more than the $3,000 difference during the five years you’ll be surcharged? I don’t think it is. Hopefully, you have a good agent that will send a restoration company directly to your home prior to the claim being filed with the company to estimate what your potential claim will be. Once that happens, the claims process will commence. Now, an obvious major claim will be opened immediately without going through the aforementioned process.
After a loss, you want to get back to normal as soon as possible, and your insurance provider wants that as well. In most cases, an adjuster will inspect the damage to your home and offer you a sum of money for repairs, based on the terms and limits of your homeowner’s policy. The first check you get from your insurance company is often an advance against the total settlement amount, not the final payment.
When both the structure of your home and your personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. If your home is uninhabitable, you’ll also receive Additional Living Expenses (ALE) you incur if you can’t stay in your home while repairs are made. The Additional Living Expenses check will be made directly to you. If you have a mortgage on your house, the check for repairs will generally be made out to you and your lender, as they are usually named on the insurance policy and are a party to any insurance payments related to the structure. Hopefully you’ll have a home inventory ready. I suggest my customers to try and record their household items every couple years if possible, even more often now days that we have a camera on all of our mobile phones.
The claims process can be tedious, but if you have a good agent/broker, he or she can help you navigate through the issues that you will encounter, especially on large losses with several coverages in play. For example, you might be assigned a liability adjuster and a property adjuster, depending on the circumstances of your claim. Your personal agent/broker will act as a “middleman” when needed if added communication becomes necessary. Most insurance is black and white when determining whether or not there’s coverage, but every once in a while, there is a grey area that could go either way. It’s nice to have a good agent that is here to help you in those situations.
If you have a good local agent/broker, please feel free to contact them with any questions or concerns regarding your insurance. If you don’t have a good local agent, please reach out to me and my Davis Family Insurance Team, we’ll be happy to help you.
