Know Your Rights - 10 Actions To Ensure Your Wildfire Insurance Claim is Timely and Fairly Adjusted

by Sherman & Howard L.L.C.

The recent wildfires raging through Colorado have once again proven tragic for our state. The 2013 wildfire season has already led to loss of life, property and, in many cases, revenue. For many, insurance will provide the single most important avenue to help respond to these losses and to rebuild lives and businesses. Given the number of insurance claims likely to arise in the aftermath of the fires and the high stakes for recovery, it is critical that those affected understand and comply with the claims process from the start to maximize recovery and increase the likelihood of prompt payment.

The following list highlights actions you can take to increase the likelihood that your claim will be timely and fairly adjusted.

  1. Give notice immediately. Contact your property insurance company as soon as possible to report the claim, both verbally and in writing. It is particularly important to promptly provide your insurer with updated contact information in the event you have been evacuated as part of a mandatory evacuation or if your home or business has been destroyed. Many insurance companies have set up 24-hour emergency hotlines. Give notice even if you don't yet know the full extent of the damage and before you undertake significant repairs or mitigation efforts. Also notify and enlist your broker to help document the claim and shepherd it through the investigation process.
  2. Understand your policy. If your property insurance policy was lost in the fires or if you do not have a copy, ask your broker or insurance company for one right away. Review the policy with your broker to determine what kinds of losses may be covered. Some policies may provide[1]:
    • Key coverages that extend the limits of your policy. To illustrate, some policies may cover items such as debris removal expenses up to a certain percentage above and beyond your policy limit.
    • Sublimits within the policy limits for certain coverages. For example, some policies may provide a sublimit for landscaping costs that limits such recovery to a specified dollar amount which cannot exceed the overall policy limit.
    • A separate item-specific limit for specified personal property items such as jewelry or musical instruments. It is important to submit these claims under the appropriate coverage parts, so those expenses do not unnecessarily reduce your overall personal property limits.
    • Enhanced building cost limits may be provided under some policies if you cooperate with the insurer and begin reconstruction within a specified time.
    If you can, take advantage of these ways to increase the total amount of coverage to which you may be entitled.  Remember, however, every policy is different and the terms and conditions of your actual policy will control.
  3. Seek immediate payment. Ask for an "advance" payment to cover emergency expenses and costs required to mitigate damages, even before the insurer has fully adjusted the claim. If you are under a mandatory evacuation order as a result of the fires, your insurance policy may cover these temporary expenses and provide you with a certain amount of money while you are forced out of your home. As long as it is safe to do so, secure and protect your property to the best degree possible. Your safety, however, should be the number one priority.
  4. Think broadly about your losses. Keep in mind that many property policies cover more than physical loss of property from the fire itself. In particular, smoke damage could be covered even if there was no fire on your property, as could damage caused by efforts to fight the fire or the evacuations associated with the fire. Business interruption and contingent business interruption losses are also typically covered.
  5. Quantify the losses. Conduct an inventory of your losses, including: damaged property, lost intangible property, relocation expenses, temporary housing expenses, lost revenue, business interruption and any other losses related to the fires. In the immediate aftermath of the fire, it may be difficult to remember everything lost in the fire. Take the time to make the list of losses as accurate and comprehensive as possible and submit it to your insurer even if you or your broker do not believe all may be covered. Include information such as the quantity, make, model, age, and cost of the items. Obtain the help of qualified professionals such as your broker, accountant or attorney to assist as necessary. Similarly, if there is a nearby fire threatening your home or business, create an inventory now before you sustain a loss. This is also a good idea for anyone in a fire prone area, even if there is no imminent danger of fire.
  6. Obtain backup documentation. Document the losses and related expenses caused by the fire and associated disruptions as they accrue. Take photographs and video of property damage before it is repaired. Keep receipts, invoices, bids and other documentation associated with repairs and other expenses. With respect to items lost in the fire, many companies retain receipts and invoices dating back several years. Work with these vendors to assist you in recreating backup that was destroyed in the fire. Provide your insurer with copies of the documentation if requested.
  7. Document your communications. Keep copies of everything you send to your insurer. Document all communications with your insurer by keeping copies of e-mails, texts or letters and making contemporaneous notes of telephone conversations. Insurance companies will be dealing with many claims, but your insurer still has a duty to communicate and adjust your claim promptly. If the insurer denies all or part of your claim, evidence of your communications with your insurer may become critical to your pursuit of coverage.
  8. Cooperate with your insurer. To the extent possible, respond to phone calls and reasonable requests for information from your insurer. Pay your premiums. Do not be afraid to ask why the information is needed. Keep an open line of communication with your insurer. If the insurer's investigation is dragging out, press the insurer for information and ask how you can help speed things along.
  9. Negotiate with your insurer. Do not accept the insurer's initial position at face value either as to coverage or the cost of repair/replacement. Your insurer should be willing to consider your position on coverage. For example, some insurers may attempt to treat your property like other properties in the area. If your property is different, be prepared to distinguish your property from other properties and explain the specific aspects of your home or businesses. Seek advice from your broker or a qualified insurance attorney if your insurer denies all or part of the claim. Obtain your own repair and/or replacement estimates and be prepared to carefully inspect and, if necessary, challenge the insurance company's estimates.
  10. Be wary of releases. Do not sign a release until you understand the scope of the release. The same holds true for restrictive endorsements that may appear on checks provided to you by your insurance company. You may later learn of additional damages associated with the fire which are unknown at this time. Avoid signing a release that is broader than the claim being paid.

Dealing with the financial repercussions of loss from a wildfire can be difficult and time consuming. By understanding your rights and taking the time to develop a plan for the claim process, you will be better positioned to maximize your recovery and reduce the amount of time it will take the insurer to adjust and pay out your claim.

[1] These examples are for illustration purposes only.  You should review your policy carefully to understand the scope and limitations of coverage under your own policy.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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