After the Fire, the Insurance Company

The recent spate of fires in southern California has taken a big toll: More than half a million acres burned, more than 1,800 homes destroyed, and thousands of people suffering major losses. When faced with such a loss, a common human reaction is to become stressed out, frustrated, angry, and depressed. Those aren't the best frames of mind in which to tend to business, but tending to business is just what you have to do when your home burns down. You have to deal with your insurance company, and do so as effectively as possible, to get the best possible outcome.

Here are some tips, which are worth reading even for those of us lucky to have enjoyed a fire-free October.

  • Contact your insurer as soon as possible, and prepare to file your claim promptly. If your copy of your policy burned, ask for another copy -- with all the pages of details. Find out exactly what you're covered for, and ask about other possibilities, such as coverage for your evacuation costs. (Dean Calbreath in the San Diego Union-Tribune notes that you may be able to secure some compensation for family members who took you in.)
  • Document every conversation you have related to your loss, noting whom you spoke with, and when, and who said what.
  • Don't sign any check from an insurer that's labeled something like "final payment," unless you're finished negotiating and want no more money. If you suddenly realize you forgot to claim your grand piano, you'll likely be out of luck.

The way to have the best experience possible in this situation is to enter it prepared. The best place to start is with your insurer -- for instance, websites of insurers like Allstate (NYSE: ALL  ) , Safeco (NYSE: SAF  ) , and Travelers (NYSE: TRV  ) have good information both for policyholders and for the general public. We should all make sure that we carry enough home insurance to rebuild our homes (many, many people don't). We should also keep a detailed inventory of our possessions, along with photos or a videotape of them. Store an extra copy of these outside your home, in a safe place.

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