Into the fire

  • By Debra Smith / Photo by Jim Leo
  • Saturday, January 29, 2005 9:00pm
  • Business

Before my house burned and my family lost nearly everything we owned, I didn’t give my home insurance policy much thought.

I knew we had one, but I didn’t pay attention to what it covered. I mean, what are the chances of that happening?

Two Web sites with information on buying homeowner’s insurance:

* Washington State Office of the Insurance Commissioner: www.insurance.wa. gov.

* The Washington Insurance Council, a nonprofit consumer education association: www.wiconline.org.

Well, it happened in March. I was home with my two toddlers when I noticed smoke billowing out from under the eaves near the chimney of our north Everett home.

I picked up my sleeping children and escaped the house safely.

Within minutes, firefighters arrived. The flames spread rapidly through the inside of the walls, charring the roof and eating through everything in its path upstairs.

We watched and waited at a neighbor’s house while firefighters broke windows with axes and chained-sawed holes in walls and ceilings, chasing the fire. They chucked toys, clothes, bedding and debris out a second-story window. Flames shot out of the roof, leaving a gaping hole where my bedroom and office used to be.

Investigators later determined that faulty installation around a stovepipe caused the fire.

When the firefighters finished their work, what wasn’t melted by the fire was ruined by smoke or water damage. The top story looked like a charred hull. Walls in the bottom story were so saturated with water they bulged.

We were awed by the speed our life could be so devastatingly altered. It would take months to piece back together our lives.

Before that moment of crisis hits, it seems simple: You have a homeowner’s insurance policy, you’re covered.

But it’s not that easy. Homeowner’s insurance doesn’t always cover everything inside a home, and sometimes coverage doesn’t keep pace with inflation.

For most people, insurance is a mystery: Homeowners know they need it, but they don’t understand what’s covered and how much it costs, said Claudia McClain, owner of McClain Insurance Services in Everett.

Consequently, consumers pay too much for coverage they don’t need, or they may not have enough of the right coverage, she said.

The typical home insurance plan covers the house, garage and any other structures on the property, and personal property inside against a “covered peril,” according to the Washington Insurance Council.

A covered peril is an accidental event or theft that causes damage or loss. The most common are theft, wind, fire and water damage, said McClain. Landslides, earthquakes and floods aren’t covered; separate coverage must be purchased for those hazards.

Insurance should adequately cover the cost to rebuild a home, not just the home’s market value, which can be considerably less. Consumers are often confused about this point, she said; you want your policy to cover the replacement cost, not just the cash value.

My home’s assessed value at the time of the fire, excluding property, was $70,000. Even though much of the first floor of the house remained intact, it would cost more than $100,000 to repair – much more than the assessed value.

Part of the reason for the discrepancy is the extra costs associated with rebuilding a house. It’s essentially like building a custom home, McClain said. There also is the cost of debris removal and cleanup, which can get costly if there is lead-based paint or asbestos present.

It can be difficult to find a contractor willing to give the necessary time and attention to a single project.

Sometimes coverage doesn’t keep pace with inflation, McClain said.

A study by Marshall and Swift, a company that performs valuations for the real estate and insurance industries, found that two-thirds of homes in California didn’t have enough coverage, and some of those were undervalued by as much as 27 percent.

Insurance companies account for inflation every year, but if the initial evaluation of a home is off, that small error can grow over time.

“You think you have enough coverage because you’ve had this policy for years, and all of the sudden the rebuilding costs have skyrocketed,” she said.

She suggested checking back with your insurance agent every five years for a quick review of the policy.

Also, it’s imperative for homeowners to let their agents know when they’ve completed a major home-improvement project. With the home-improvement craze, people are pouring thousands into upgrades such as granite countertops, high-end wood cabinets and tile floors.

“While it may be the exact same square footage on that house, the cost to rebuild can be significantly changed by ongoing remodeling,” she said.

A good rule of thumb is to add coverage when a project would cost more than $5,000 to repair. If you’ve added a room or deck, it’s helpful to give the agent the square footage.

Good insurance agents will tailor a homeowner’s policy to fit the client. There are many special circumstances that aren’t covered by a policy. For instance, home businesses such as day care centers aren’t covered. Neither is that custom car or boat stored in the garage. Jewelry, silverware, guns, fine art and cash all have limits on the amount that will be reimbursed.

Liability also comes with the average policy, which protects homeowners if someone is injured on their property or as a result of the homeowner’s unintentional actions elsewhere.

McClain recommended buying the maximum amount of liability insurance available, usually $500,000 of coverage.

“While liability claims are not very frequent, when they happen, they can be very serious,” she warned.

It’s a good idea to inventory everything you own in the home and in other buildings on the property, McClain said. If listing each item is too daunting, use a camera to document what you own. Open closets and cabinets and shoot pictures of what’s inside. Then make a copy of those photographs or list and store a copy off-site.

The typical policy reimburses homeowners for the replacement value of only those items they replace.

The claims agent handed us a stack of forms and told us to list every possession damaged in the fire. It was difficult to remember everything we owned, particularly during a time when we were under stress.

We received a check for the depreciated value of our belongings. We then had to replace every item we lost and submit receipts to be fully reimbursed.

Home insurance policies typically pay homeowners to rent comparable housing if they aren’t able to use their home. Our insurance company helped find us a house to rent nearby and provided rented furniture and housewares while our home was being repaired.

Even though we knew little about our homeowner’s policy, we were fortunate enough to have the coverage we needed. We’re now back in our home, and life has returned to normal.

“The one thing to know about major losses is that it is an insurance company’s time to be a hero,” McClain said. “Very seldom will I find an insurance company that doesn’t step up and do the right thing to get the family whole again.”

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Diane Symms, right, has been the owner and CEO of Lombardi's Italian Restaurants for more than three decades. Now in her 70s, she's slowly turning the reins over to her daughter, Kerri Lonergan-Dreke.Shot on Friday, Feb. 21, 2020 in Everett, Wash. (Andy Bronson / The Herald)
Lombardi’s Italian Restaurant in Mill Creek to close

Lombardi’s Restaurant Group sold the Mill Creek property currently occupied by the restaurant. The Everett and Bellingham locations remain open.

The Safeway store at 4128 Rucker Ave., on Wednesday, Nov. 29, 2023, in Everett, Washington. (Mike Henneke / The Herald)
Kroger and Albertsons plan to sell these 19 Snohomish County grocers

On Tuesday, the grocery chains released a list of stores included in a deal to avoid anti-competition concerns amid a planned merger.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion's 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Inslee energized from visit to Everett fusion firms

Helion Energy and Zap Energy offered state officials a tour of their plants. Both are on a quest to generate carbon-free electricity from fusion.

Awards honor employers who promote workers with disabilities

Nominations are due July 31 for the awards from the Governor’s Committee on Disability Issues and Employment.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.