Calif. wildfires underscore need to review insurance coverage

The loss this week of more than a thousand homes to wildfires in Southern California brings into sharp focus the importance for all homeowners to have proper insurance coverage. Many of the homes affected by this week’s fires are likely to be compensated to some degree by homeowners insurance. Any home that still has a mortgage must also have homeowners insurance, and fire is a covered peril under the typical policy.

But many homeowners may find belatedly that their policies won’t pay as much as they had anticipated. Guaranteed replacement-cost coverage, which promises to finance the rebuilding of your home no matter what the cost, is either too expensive or impossible for many consumers to buy today. Some homeowners also forget to add coverage when they make additions to their homes; their original insurance may not cover the cost of rebuilding that additional space.

That’s why it’s important to review your policy regularly to make sure your policy is keeping up with the increasing cost of replacing or rebuilding your home. Click here for our advice on protecting your home and belongings.

Another peril for California homeowners who’ve lost their homes is the specter of being denied insurance for the next home they build. That happened to a number of Californians following the last major fire in San Diego in 2003. In response, Consumers Union, parent organization of Consumer Reports, this week urged California Insurance commissioner Steve Poizner to prevent insurers from refusing to issue or renew homeowners insurance policies based on claims from this fire and other natural disasters.

In addition, Consumers Union offers some useful information, including a resource list and some claims-filing recommendations, for California homeowners who’ve experienced a loss. For others, this concise guide will help you to prepare yourself for a natural disaster.—Tobie Stanger