Spring in to action: financial preparedness for wildfire
As we work through the last month of spring, NFPA wants to make sure you are ready for wildfires. There are many actions when it comes to preparation ahead of a wildfire, one important step that often gets overlooked is financial preparedness. Homeowners and renters need to have property insurance in place to help recover from a wildfire or other disaster.
Recent wildfire losses are highlighting a real problem of underinsurance. According to a posting on insurance.com, "Most homes are underinsured. Nationwide estimates that about two-thirds of American homes are underinsured. Some homes are underinsured by at least 60 percent and the average is about 22 percent. CoreLogic estimates that three out of five American homes are underinsured by an average of 20 percent." This means that when a loss from wildfire or other disaster occurs, much of the repair or rebuild cost will fall on the homeowner as an out-of-pocket expense.
To ensure your coverage is update to-date, our friends at American Property Casualty Insurance Association (APCIA) recommend doing the following each year:
- Update your policy after remodels or home improvements.
- Ask if your policy has coverages for three key things to prevent underinsurance:
- Extended replacement cost;
- Building code upgrade coverage; and
- Annual inflation adjustment.
- Be sure your policy reflects the correct square footage, number of bedrooms / bathrooms and doors and windows.
- Make sure your policy reflects your home’s finishes like granite countertops or hardwood floors.
- Renters need property insurance too. Consider bundling renters’ insurance with your auto coverage.
- Add comprehensive coverage to your auto policy to protect car in a wildfire
Another important step to determine if you have enough coverage to replace your possessions is to create a home inventory. This task may seem daunting, especially if you've been in your home for many years, but it can be manageable. Some simple steps from the Insurance Information Institute include:
- Pick an easy spot to start, an area that is contained such as a small kitchen appliance cabinet or sporting equipment closet
- List recent purchases
- Include basic information – where you bought it, make and model, what you paid
- County clothing by general category
- Record serial numbers found on major appliances and electronic equipment
- Check coverage on big ticket items
- Don't forget off-site items
- Keep proof of value – sales receipts, purchase contracts, appraisals
- Don't get overwhelmed – It's better to have an incomplete inventory than nothing at all
When creating your home inventory, embrace technology! Take pictures or videos, back them up digitally. There also many apps available to help organize and store your records.
The current wildfires in Arizona and New Mexico remind us that wildfires can occur any time of year when the conditions allow. Start your financial preparedness now – visit APCIA to download the How to Update Your Insurance and How to Create a Home Inventory tip sheets to guide your annual insurance review. Share with your friends and family so they can be ready too!