Fire Insurance Claim and Social Security Benefits

It’s been awhile since I’ve mentioned the challenges that we’ve been working through since the house fire and my dad’s passing late last year.  There has been a fair amount of activity but there is still a long way to go.

My mother did confirm that she is not entitled to any of my dad’s social security benefits because she is working and makes too much money.  (which frankly isn’t all that much).  So, mom will need to figure out how to live on a lot less money than she was previously.  I’ve done some analysis for her and have figured out that she can swing her budget on just her salary but it will be tight.  She has decided that she does want to live in the house again once it is repaired, at least for a little while.

The insurance claim process is proceeding as well.  I have negotiated settlement prices on both the boat and one car that was in the garage as well as some heavy equipment that was in there.  A HUGE lesson that I’ve learned through all of this is that you shouldn’t accept the first thing that the insurance company offers you.  There are a lot of factors that you need to consider when deciding whether they are offering a fair settlement price for an item:

• Do they understand exactly what they are valuing?
• Did they miss any options or accessories that are part of the claim?
• When they looked for the replacement cost of an item, does it match what you lost? 
• Did they depreciate each item correctly?

These were all huge factors in getting items valued correctly.  In many cases they made assumptions about what they were trying to place a value on and they estimated on the “low” side.  Some items were higher end models than the insurance company realized and that negatively affected their valuations.  In many other cases, they had no idea of the age of the item and either left that blank (which applied maximum depreciation to the item) or guessed an age that was way too old.

Another very significant event that helped immensely was that my mother’s insurance company offered to pay to have a third party company come in to inventory what was in the garage after the fire.  This person was able to identify over 650 items in the garage.  It would have been too overwhelming for us to go in and dig through the rubble to try to document what was in there so this turned out to be the most significant event so far.  My father had many, many items in the garage and shop and he took much of that knowledge to his grave.  When you are choosing your insurance company, I would highly recommend checking to see if they will cover paying a third party to inventory your contents after a major loss.

The last thing I wanted to mention about this experience is that it turns out that the vast majority of people in this country are UNDERINSURED.  My mother is very lucky that the house was only smoke damaged when the garage burned down.  If the house had been destroyed she would have not been able to rebuild with the coverage she had.  She thought she had enough, just like we did, but it turns out that when you calculate the cost to rebuild, you also need to consider costs like: demolition and removal of debris, permits, engineering and architecture etc etc.  This experience has caused me to take another look at my coverage on my own house, that’s for sure.  I’d recommend you do the same.