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Dan The Real Estate Man
Dan The Real Estate Man
REALTORĀ®
(562) 618-4993
DanSellsRealEstate@gMail.Com
Century 21 Classic Estates
13217 South St.
Cerritos, CA 90703
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What You May Not Know about Fire Insurance

 

Fire caused by nature, or a natural pest like squirrels chewing through wires, or even a pack of teenage boys carefully ignoring warning labels on fireworks, is never pleasant. It takes on a life of own and can be extremely dangerous to life and property. Fire is considered in the insurance industry as a "peril." With the extensive menu of insurance options available to homeowners and renters, make sure that your policy covers fire damage as a peril or you might have trouble getting the company to pay the claim.

Also note that in addition to your living quarters, fire insurance policies can cover buildings other than your main dwelling. If you have an "other structures" clause, you can have fire insurance coverage for buildings such as garages, barns, pool houses, or storage facilities.

Help Yourself and Your Policy

These simple installations might help you qualify for a discount as well as protect you from severe loss:

  • smoke detectors
  • carbon monoxide detectors
  • a sprinkler system
  • heat detectors
  • fire escapes
  • fire extinguishers
  • storage of flammable substances outside the home

A simple way to help protect your valuables is to have appraisals (in a fireproof safe, or off-site) for high-ticket items like jewelry or artwork. If you don't have an itemized list, you could receive a much lower payout for the insurance company's standard value of such belongings. Insurance companies will only pay so much, and often have caps or limits, on replacement values for luxury items.

Keep paying your insurance premiums even after a fire. Although this seems counterintuitive, paying to keep coverage current will cover anything related to the incident, including pets. So, if you're staying somewhere else while the property is being repaired or rebuilt, your insurance will cover any incidentals while in transition, for example, a kennel for Max. You can even use the policy to cover the place where you are staying for liability purposes.

Included in "incidentals" is temporary housing and essentials. If clothing and necessary items like toothbrushes were destroyed, you can get an advance from your insurance company to cover those types of expenses. Keep every receipt for your, and their records.

Replace or Cashout

Actual cash value (ACV) can differ significantly from replacement value. Actual Cash Value is related to market value, the amount a buyer would have paid  for the property had the home not been destroyed.

Replacement value is probably the best route to take, vs. ACV, as it makes the property as it was before. ACV is subject to the fair market value of the home, which is based on comparables in the area. There could be a considerable gap between fair market and the value of replacing all the home's contents.

 

 

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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