Are You Properly Insured For A Fire Loss?

Even if your property is insured for the purchase price, you may still be underinsured if you sustain a full loss to the property.

This part of the contract is called the co-insurance provision, which requires you to fully insure your property. For instance, a co-insurance provision of 90% means that you must at least insure your property for 90% of the amount it would take to rebuild it. Most of us donʼt take into account how much it would cost to rebuild the property if it sustained a total loss and are only insured for the amount the property is purchased.

I learned this a couple of years ago, when I represented a property owner who had a substantial hail damage claim at an apartment complex he owned. He got a great deal on the property and based upon the advice of his insurance agent he insured the property for the purchase price. However, he soon realized he was regrettably underinsured because the cost to rebuild the complex was substantially higher than the purchase price.

The terrible advice from his insurance agent lost him a lot of money, as he could not recover the full value of his claim due to the co-insurance penalty.

Residential fires are very common. Believe me, fires can happen to anyone. Just last year, I lost a rental home to a fire. So pull out your insurance policy and call your agent. It won't take 10 minutes. Trust me - it'll be time well spent.