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Fire Insurance Claims

SUMMARY
 

Whether the cause is arson, faulty wiring or improper handling of combustibles, a house fire is a catastrophe for the homeowners usually resulting in significant structural damage and loss of property. An appropriate policy of fire insurance is a must--and is a requirement if the property is mortgaged. All homeowners policies sold in Michigan must contain coverage for fire loss and state law requires that every fire insurance policy contains certain provisions spelling out obligations of both the insured and insurer in the event of a fire. This does not mean that all fire insurance policies are identical and it is very important that you discuss your particular coverage needs with a competent insurance agent and understand what your policy does and does not cover and what your responsibilities are in the event of a fire.


Policies typically include the following types of coverage for fire loss:

Dwelling--protects against loss to the structure of the dwelling. A loss which occurs to the dwelling is typically settled on a replacement cost basis. Replacement cost is the cost necessary to replace, repair or rebuild damaged property to its original condition with materials of the same kind and quality. For example, a hardwood floor would be repaired or replaced with the same kind of wood.

Appurtenant structures--other structures on the property such as a detached garage, are typically covered for up to 10%of the dwelling amount.

Contents--this coverage protects against lost personal property in different amounts, depending on the policy form. Covered loss of personal property is usually settled on an actual cash value basis. Actual cash value means the current replacement value of property less depreciation. However, some companies do now offer replacement
cost on personal property.

Special Items--most policies contain special limits on coverage for items such as money, jewelry, computers, coin collections or furs. These limits vary by company and typically do not increase the total amount of coverage under the policy.

If you have a fire, your insurer will require you to prepare an inventory of the home’s contents listing what items were damaged or destroyed. We strongly urge that you take the time to inventory the items in your home prior to any loss to aid you in the unfortunate event of a fire. If possible, list all personal items in your home and be as descriptive as possible listing the make of the item, the model, the year it was purchased and, if possible, save the receipt. Photographs or videotapes are often very helpful in this process.

Every fire policy issued in the state of Michigan provides that an action against the insurer must be commenced within one year of the loss, or within the time period specified in the policy, whichever is longer. The time for beginning an action is tolled from the time the homeowner notifies the insurer of the loss until the insurer formally denies liability. Statutes of limitations and other time limits found within the policy can be complicated and it is imperative that you have an attorney review your policy as soon after the fire as possible so that your rights are not lost.

More information about fire insurance issues may be accessed in the Archives of the TOV Safety & Injury Blog (Fire insurance claims), (Limitation periods)

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