Understanding your home insurance policy is an important first step to filing a claim. Whether your home was damaged in a house fire, a wildfire, or a flood, there are three main pillars to your insurance claim: Loss of Use, Personal Property, and Structure / Dwelling. Below, you can find more details about how each section applies to your home.
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Loss Of Use – Additional Living Expenses
The first part of your home insurance policy is called Loss of Use or Additional Living Expenses. This part helps you pay for living expenses above your normal expenditure as a direct result of losing the use of your home. These include costs such as:
- Short-term rentals (hotel stays)
- Long-term rentals (an apartment while your home is being repaired)
- Food expenses (above your usual grocery bill)
- Moving expenses
- Travel
Additional Living Expenses may also be relevant in the event of a mass evacuation order due to floods or wildfires, though “mass evacuation” insurance is usually its own distinct category of coverage.
Personal Property
Insurance can help you replace or restore belongings that were damaged or lost in the fire. Your home insurance covers more than just the big-ticket items like electronics and appliances. It covers all your personal belongings, including:
- Wet and dry food
- Clothing and linens
- Artwork
- Electronics
- Books and media
This section of your insurance does not cover windows, doors, or fixtures, since these are covered in the Structure / Dwelling part of your policy. Items that belong to a tenant are not covered and require other insurance policies (such as renter’s insurance). Business items might be covered in part, but are most likely subject to a modest limit, and alternative insurance policies, such as business insurance will make up the difference.
In order to receive insurance for lost personal property, you will have to complete a Schedule of Loss and submit it to your insurance company. This is an exhaustive list of eligible property. Depending on the terms of your insurance policy, you will be offered either the Replacement Value or Actual Cash Value for your items.
If your insurance offers Replacement Value, you will be offered the full cost of replacing all of your lost belongings. If your insurance offers Actual Cash Value, they will offer compensation based on the depreciation of lost belongings – not what you paid for them originally or how much it would cost to replace today.
Structure – Dwelling
Damage to the structure of your home can be the most expensive part of getting back on your feet after a fire. If you live in a single-family house, your home insurance policy includes Structure / Dwelling coverage to help you pay for the repairs your home will need. This part of your insurance likely covers:
- Foundations
- Interior and exterior
- Windows and doors
- Floors
- Fixtures such as lighting and bathroom fixtures
Your insurance company will set a “scope of work” outlining exactly what needs to be done to repair the home, and they will put out a tender to several contractors, usually contractors they’ve worked with before to get an estimate for what that scope of work would cost to complete.
Disagreements over the extent of the repairs necessary is one of the most common problems with home insurance claims, since your home insurance is intended to restore your home to its pre-loss condition. For example, if one side of your home were damaged by fire but one side was left untouched, the insurance company may only want to repair the damaged side.
Repairing or replacing only some of a home’s finishes negatively affects the value, meaning it hasn’t been put back to it’s pre-loss condition. You may be able to negotiate with the insurance company to completely replace the finishes on your home so that everything matches and the value remains equal to its pre-loss value.
These are the 3 main elements of your home insurance policy. Contact your insurance provider for more details about your policy as you make your claim.
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