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Fire Insurance: What You Wish You'd Known

By: Teri Bernstein


Almost every homeowner has fire insurance...but, is it enough to replace one's home and belongings? Like every contract, the devil is in the details. What is covered?


  • Assessed value?
  • Original cost?
  • Depreciated cost?
  • Replacement cost?
  • Replacement cost with limitations?

In situations like the devastating fires in and around Santa Rosa, California, where whole neighborhoods are wiped out, the rebuilding costs will soar due to supply and demand as many people make claims. What is worse, however, is that insured homeowners might think they have coverage when they don't.


"Narbeh Shirvanian, a Glendale lawyer who handles fire-related claims, said it’s not unheard of for an insurer to change the terms of a policy during the renewal process. 'It might be disclosed,' he said. 'But let’s be honest, nobody really reads all this stuff.'"


In other words, your renewal policy might not account for inflation, or may have substantive language changes that leave you under-insured. In addition, smoke and ash damage may or may not be covered. Here is a heads-up to keep your assets covered: 


"A smart idea is to pay a little extra for what’s known as an extended replacement cost endorsement. This is basically additional coverage intended to accommodate at least a portion of any unexpected cost increases. You can also purchase additional coverage for code upgrades. For example, the rules might have changed for electrical systems or insulation since your house was built. Code-upgrade insurance will protect you from so-calledbetterments that your basic policy might not address."


Source: "As California burns, here's what you need to know about fire insurance," by David Lazarus, Los Angeles Times, October 11, 2017.



  • If you are a renter, are you insured? (only 40% of renters are insured for their personal belongings.) List the pros and cons of being insured as a renter and if you were a homeowner. 
  • What is an extended replacement cost endorsement?  What is a betterment and how does it relate to a code upgrade? Give an example. What is code upgrade coverage?  How might you decide if these additional coverages are a good idea?