It’s a truly terrifying mental exercise to consider what would happen if your house burnt down. Where would you go? How would you salvage any clothing or memories or important documents? What happens to your mortgage? What will your insurance cover? There are so many concerns when such a tragedy strikes, but here are some of the basics to what your options are and how your bank and insurance agency can help you in your time of need.
Firstly, if you and your family can no longer live in the house because of the fire damage, shift into “business trip” mode to keep track of expenses and what your insurance company owes you. The money you spend on housing, food, etc. while your house is unlivable is all covered by your fire insurance policy, so keep receipts of everything you spend to make filing your claim easier. Even if you live with a relative or family friend instead of a motel, ask them to create an itemized receipt of what it “costs” them to host you.
You also have to do your part to make sure your claim is investigated and taken care of in a timely manner. While this may be the furthest thing from your mind in a time of crisis, staying on top of your claim and managing your side of the deal will make the process short and sweet. For example, many policies require that the homeowner take some precautions against any further damage. You as the owner may want to start boarding up the windows of your home and erecting a temporary fence to keep out unwanted pests or vagrants. Furthermore, keep on paying your insurance premium on your homeowners’ insurance. Even though your house is gone, the insurance still covers your pets and any damage they may cause.
You need to move with haste, and you have to prod your insurance agency to do the same. Some states require that insurance agencies provide a letter of intent within 30 days, but for those who do not, you need to make sure your case is open and thoroughly investigated in good time. Agencies are busy, and you don’t want to be any further down their priority list than you have to be. Take your time to thoroughly consider what exactly you’ve lost in the fire, and don’t close your claim until you’re 100% satisfied that you’re compensated for all your losses.
Regarding your mortgage, this can be tricky, but in general, the policy goes something like this: your “dwelling coverage” policy will pay the bank first to cover what you haven’t paid on the mortgage, and then pay you what’s left over to go towards rebuilding or purchasing a new home. Exactly how much you get depends on some details in your policy, including whether you’re covered for actual cash value or value lost, but your agent will be able to answer those specifics easily.
When a tragedy like this strikes, it’s important to try to keep a cool head and ensure your agents and all others involved act in good faith. If you get the impression that the people around you are trying to make your life difficult or stiff you, you can file a suit of bad faith. Otherwise, assuming all else is in order, you should be able to get your life back together in good time.