How to get what you deserve when filing an insurance claim
We're only three days in to the era of Get Rich Slowly 3.0, and already GRS readers are providing inspiration for articles. On Sunday's “I'm back” post, for instance, Amy wrote the following:
As I type this I'm camped out on my brothers sofa, having evacuated my home during the fires in Santa Rosa. I'd love an article in the future about insurance, preparing and recovering from disasters. Thankfully my house is still standing right now, but much of our neighborhood is gone. My home no doubt has smoke damage…
There are tons of people with similar questions after the recent hurricanes. And every day, families suffer individual tragedies when their homes burn down or nearby rivers flood. How do you handle insurance when disaster strikes?
What to Do When Filing an Insurance Claim
As it happens, last year I bookmarked a question on Reddit from a family that lost everything in a fire. One of the replies was from somebody who had inside info on how to get all you deserve when filing an insurance claim.
I used to be the guy who worked for insurance companies, and determined the value of every little thing in your house. The guy who would go head-to-head with those fire-truck-chasing professional loss adjusters. I may be able to help you not get screwed when filing your claim.
Our goal was to use the information you provided, and give the lowest damn value we can possibly justify for your item.
For instance, if all you say was “toaster” — we would come up with a [cheap] $4.88 toaster from Walmart, meant to toast one side of one piece of bread at a time. And we would do that for every thing you have ever owned.
His advice? Don't lie on your claim — that's illegal and could lead to bigger problems — but insist on being compensated with “like kind and quality” items. (He provides some specific examples in his post.) The more specific you can be, the better. If you know exact models, then name exact models. If you don't know the models but know an item had specific features, then be sure to request a replacement with those specific features.
When filing your claim, he says to list everything you can think of, even the mundane stuff. If you're writing up the shower in your bathroom, for instance, you might include:
- The shower curtain.
- The shower curtain liner.
- The shower curtain rings.
- The soap dispenser.
- The sponge loofah.
- The loofah holder.
- The shower caddy.
- All of the stuff in the shower caddy.
- And so on…
“I could probably keep thinking, and bring it up to about $400 for the contents of my shower,” the commenter writes. “Most people writing claims for a total loss wouldn't even bother with the shower (it's just some used soap and sponges) — and those people would be losing out on $400.”
For more expensive stuff, you'll need documentation. You can't just say you had a $2000 TV and expect the insurance company to provide you a new one. For the big-ticket items, you need to provide some sort of paper trail, preferably with receipts. If you don't have a paper trail, try to provide a photograph. (Maybe your expensive TV is in the background of your family's Christmas gathering from last year, for instance.)
If you need to file an insurance claim, I highly recommend reading this entire Reddit comment. It's full of good information.
The U.S. government has an entire website called Ready.gov, which is devoted to disaster preparedness and response. If you live in a high-risk area, you ought to take some time to browse through the advice and put some of it into practice. And if, like Amy, you've been hit by a catastrophic event recently, check out the recovering from disaster section.
What to Do BEFORE Disaster Strikes
One of the core tenets of this site is that it's always best to be proactive. That's especially true in the case of insurance claims. Instead of waiting until disaster strikes to document the contents of your home, you're much better off taking the time to do so today.
Where Kim and I live, the biggest risk is earthquakes. Since a 2015 New Yorker article about the potential for a massive earthquake in the Pacific Northwest, folks around here have been especially jumpy and willing to prepare. In fact, when we bought our new house this summer, the previous owners left behind a big bin in the back yard filled with water and food and supplies. “It's for when the big one strikes,” they told us.
For insurance purposes, I believe the best way to prepare and be proactive is to document everything in advance — before you run into problems. In fact, Kim and I intend to do just that this winter.
When we moved to our new home, we downsized. We got rid of a lot of stuff. But we also had to buy some new things too. (Because that's what happens when you move, right?) Now that the dust has settled, we're ready to go through the house and inventory what we own.
- Our first step will be to walk from room to room with a cell phone, taking video of everything we own. We'll especially focus on the major items in those rooms, documenting makes and models and serial numbers.
- Next, we'll create a text file (or spreadsheet) listing our most expensive items, their serial numbers (if applicable), when and where we purchased them, and how much we paid. This is going to take a bit of work, but we're okay with that.
- Finally, we'll store this info in the cloud. It doesn't do any good to document everything if you're going to store that documentation in your home. If you lose your home's contents, you'll lose the documentation!
This personal inventory will probably take most of an afternoon. It'll be tedious. (To make it less tedious, we'll add wine to the mix. Wine makes everything less tedious.) But once we're finished, we'll feel better knowing that if something does happen, we'll get what we deserve when filing an insurance claim.
I'm fortunate to never have lived through a devastating loss to my home, so my advice here is all theoretical and/or based on the experience of others. Have you dealt with the loss of your home before? Have you had to file a large insurance claim? How did you handle it? What advice do you have for others?
Reminder: Comments are still goofy and will appear in ALL CAPS. I know what the issue is, but I cannot fix it until I have access to the Get Rich Slowly backend. I apologize for the inconvenience.