Have you ever wondered what happens when your house goes up in flames? It’s not the kind of topic we often discuss, but sometimes it’s good to be prepared for the worst. Last year, lightning struck my house not once, but twice. Thankfully, the damage was minimal, but it got me thinking about what could have happened. That’s when I decided to reach out to my friend Todd Curry from the Curry Agency to get some answers.
Call Your Agent for Support
Imagine standing in your yard, helplessly watching the fire department battle the flames devouring your home. In that moment of panic, what should you do? Todd’s advice is simple: call your insurance agent. Their primary role is to be there for you during such disasters. They offer emotional support and take care of all the logistics.
Maintaining Your Standard of Living
If your home is completely destroyed and uninhabitable, your homeowners policy has a “loss of use or additional living expenses” coverage. This policy ensures that you can maintain your standard of living while dealing with such a loss. So, if you’re used to living in a mansion, don’t worry. Your insurance will cover the cost of renting a comparable place during this challenging time. Moreover, expenses like laundry, meals, and more are also covered. Just remember to keep detailed records and receipts to maximize your claim.
Handling Your Mortgage
When faced with such a devastating situation, it’s natural to worry about your mortgage. Let’s say your home is valued at $300,000, with a remaining mortgage of $150,000. Thankfully, your homeowners coverage policy has you covered. When you first purchased homeowners insurance, the value of your home was determined as the replacement value. While there may be a few conditions tied to the policy, it’s essential to know that the bank gets paid first. Whatever is left is what you can use to rebuild your house or purchase a new one. Some policies even include coverage for closing costs or provide a monthly stipend to help with potential interest rate increases.
Replacing All Your Belongings
Even with all the coverage mentioned above, the question remains: How do you replace all your possessions? This is where personal property coverage steps in. It helps cover the cost of replacing your furniture, kitchen appliances, and even your beloved shoe collection. So, how does personal property coverage work? Typically, it’s a percentage of your home’s value. For instance, if your home is valued at $300,000 and your coverage is 50%, you’ll receive $150,000 to replace everything. However, it’s essential to understand the details. Your policy may differentiate between replacement cost and cash value. Replacement cost ensures that if you bought a sofa for $1,000 ten years ago, you’ll receive $1,000 to replace it today. On the other hand, cash value may only give you $100 for that same ten-year-old couch. To ensure a seamless transition after a disaster, it’s recommended to create a comprehensive inventory of all your belongings. You can either hire a professional company or do it yourself. Just remember to keep the documentation in a safe place outside your home.
Know Your Policy
While the information provided here is valuable, it won’t be of much use if you’re not familiar with your own insurance policy. Take the time to research and understand what coverage you have and what to expect in the event of an unthinkable disaster. It may be worth giving your agent a call today to discuss increasing your coverage to a level where you feel comfortable. It might mean spending a bit more each month, but having the peace of mind that you’ll be taken care of in a tough situation is priceless. Ultimately, the decision on coverage lies between you and your agent, so make sure you have that conversation.
Let’s Watch the Conversation
If you’d like to hear my chat with Todd Curry about this topic, I recorded it for Pete the Planner’s radio show on WIBC. You can check out the video here: [link to the video].