The California wildfires have wiped out numerous homes and caused the necessary displacement of thousands.
As a Los Angeles homeowner (or someone who hopes to own a home soon), you know that the second most important thing, right behind assuring the safety of yourself, family, and friends, is to make sure you have a great homeowner’s insurance policy. It’s important to make sure you have the best coverage that you can afford. If you are looking for an insurance company for the first time, or considering changing companies, the YellowBook website has a list of Homeowners Insurance Providers for the LA area.
New homeowners may be confused about how Homeowner’s Insurance works and how much coverage they will need. A basic policy covers three things: personal liability protection, personal property protection, and damage protection. It’s the last one that protects a homeowner from the cost of rebuilding in the case of a fire or other natural disaster. There are also specialized add-on insurances available, for an expensive art collection or anything else of significant value.
When comparing homeowner’s insurance policies, there are several things to keep in mind. The first is the amount of deductible you will be responsible for, or the amount you will have to pay for claims on the insurance policy. A higher deductible can save you a good percentage off of your annual premium for the policy, but it will mean that you need more money upfront. A lower deductible will charge more monthly, but you won’t have to pay as much, if anything, out of pocket in the case of an emergency.
A second consideration is whether or not the insurance company offers discounts for smoke detectors, home security systems, special building modifications that lowers the likelihood of a total loss of property, or anything else that helps to protect your home. You also need to check to see if they have a limit for the insurance levels for jewelry and other valuable.
Perhaps the most important consideration is the type of coverage offered. The two most common options are depreciated value and replacement value. Insurance policies that offer to pay the depreciated value of a home and it’s contents will only pay the current value of the item. For example, if your stove was destroyed in a fire, the insurance company would only pay what the stove is worth now, not what you paid for it. Chances are good that the money you get back in that instance would not be enough to replace the appliance.
In order to have ruined appliances, and other property, replaced fully, you will need replacement insurance. Although it is more expensive, you are saved from having to pay for new appliances and other home necessities more-or-less out of pocket.
If you are buying a home, you need to learn as much as you can about different homeowner’s insurance options. Especially in areas prone to natural disasters, your insurance policy can make the difference between being able to pick up and rebuild as soon as it’s safe, with minimal financial responsibility on your part, to having to pay for much of the reconstruction yourself.
If your home, or other property, has been affected by the California wildfires, or if your home is at risk, there is a PDF document, put together by the state of CA and city of San Diego. Although the document is intended for San Diego residents, the information is useful for anyone in the southern CA region. You can access it here.