AFTER THE FIRE IS OUT

A Primer For the Policyholder

by Ronald J. Zaremba, CPCU

Zaremba Claims Service, Inc.
Yakima, WA 708 W. Walnut, 98902 (509-452-6527)
Pasco, WA 1620D W. Lewis, 99301 (509-545-6858)

Permission is granted to reproduce all or part of this article only if the author and Zaremba' Claims Service, Inc. is given proper credit.

AFTER THE FIRE IS OUT

BY Ronald J. Zaremba, CPCU

If your have just had a fire loss, this article was written to assist you. The feeling of helplessness and despair that starts during the fire is reinforced immediately afterwards when you view the damage caused by the fire. The sense of loss combined with misunderstanding can create a state of confusion that is overwhelming. The interruption in your lifestyle caused by the fire can be one of the traumatic eve@ of your lifetime. It doesn't have to be. In most cases the damage looks worse than what it actually is. First try to keep things and events in perspective. What seems catastrophic today will, in fact, a year from now or even six months from now, not be nearly as important. Secondly, channel your energies toward things that you can change. In other words, don't cry over spilt milk. Emotional stress will not bring back your valuable possessions and heirlooms. On the other hand, prompt action may save them.

Many of us during our lifetime will suffer a major fire loss. You I re not alone. There are many people who can help you once a fire occurs. The first group you have already called, the fire department. The fire departments are the experts in extinguishing the blaze and preventing the fire from reoccurring. They also provide service to protect the property from further damage, promoting fire safety and awareness, and investigate to determine the cause of the fire. Many others are available to you to help you. These include your neighbors and friends, church and charitable organizations. More specifically, if you have insurance, your primary assistance will be from your insurance agent and 'the adjuster for the insurer. Others who can help include the repair firms and contractors, the house cleaners and renovators, fire investigation experts, the Insurance Commissioner's Office, your attorney and accountant. Some of these services are paid for by your tax dollars, some by contribution, some by your insurance premium and some directly by you after the loss. The most important to you in submitting an insurance claim are your agent and the adjuster.

Although there are millions of policyholders and thousands of insurance companies, fortunately the requirements in case a loss occurs are fairly standard. Nearly every state requires that the standard fire insurance policy be incorporated into the policies written in the state. Part of the standard fire insurance policy is the 165 lines (numbered) that form a section of your policy. A copy is attached. The requirements in case a loss occurs are found in lines 90 through 122.

The first requirement is that you immediately notify the insurance company in writing that there was a loss. Many companies will waive this requirement and accept oral notice to the agent as sufficient. However, there are thousands of insurance companies and not all of them waive this requirement all the time and some of them insist upon this requirement be met in every fire. Ask the agent or adjuster if written notice of the loss is required.

The second requirement after a loss occurs is to protect the property from further damage. You cannot abandon the property to the insurance company and say "it's their responsibility." It is your responsibility to protect the property from further damage. This may be a problem particularly if the fire department has secured the building to preserve evidence for further investigation. If the fire department has secured the building and will let no one in, ask them to take the necessary steps to prevent further loss.

Damage caused by your failure to protect the property is at your own expense. However, the expense to protect the property from further damage is part of your claim on the insurance policy, subject to its limitations. If you do not know the name of a contractor or cannot contact one, your agent and adjuster will be able to help you immediately following the fire.

What steps you should take to protect the property from further damage after a loss are dependent on the extent of damage and the nature of the occupancy and contents. The first concern is protecting the property from the elements and trespassers. Close the breaks or openings in the walls and roof. Board up and secure the windows and doors. Drain the plumbing and heating pipes and fixtures. Put antifreeze in the traps and toilet. Provide temporary heat or restore the permanent heating system. If you can't get the electrical power back on, arrange to see if temporary repairs can be made to provide electrical power. Install temporary partitions if needed. Remove the easy to-carry out valuables such as money, securities, guns, jewelry, silverware, etc. Consider hiring a security service or having a neighbor watch the place while it is unoccupied.

The second area to consider is protection of your property from moisture and dampness. Beg, borrow or rent portable fans to ventilate and air out the inside of the building. Mop the floors and pump out the basement or cellar. Shut off the water if the pipes are broken. Lubricate and clean metal machinery. Dry off and vacuum the furniture and fixtures. If possible, move some of the contents to a portion of the building not as severely damaged. Don't forget the items that are affected by change in temperature. Check the contents in the freezer and refrigerator and remove them if power will not be restored. House plants should also be relocated if possible.

Check the structure for unsafe conditions. Take down or brace hazardous masonry walls and chimneys. Shore up or cordon off weakened floors and roofs. Either shut off the gas and electricity or arrange to have temporary repairs made immediately. Remove any dangerous personal property. Keep your efforts and expense to protect the property in perspective with the value of the property you are protecting. Extra ordinary expense is warranted only when extra ordinary values are at risk.

Your agent can assist you in getting knowledgeable contractors to help protect your property. Your agent can also get the adjuster out to the scene of the fire as soon as possible to assist you and make recommendations based upon his experience.

The third requirement, in case a loss occurs, is to separate the damaged and undamaged personal property, put it in the best possible order and to make a complete inventory. This is the essential procedure for establishing your loss and claim.

The time and expense necessary to segregate the property and to inventory the property and loss is your responsibility. Your insurer may assist but it is still your responsibility to inventory your loss, segregate the damaged from the undamaged and to document the damages in submitting the claim. Assistance in inventorying your loss can be obtained from your family, your employees, your neighbors and friends, or hiring a public adjuster, an inventory firm or an accountant. You, the adjuster and the repair firms should review the items to determine which items are cleanable or repairable and which are not. However, those items that are not damaged should be immediately segregated.

After the undamaged items have been segregated from the damaged items, the damaged items should be completely inventoried. The inventory should be systematic. The easiest way is to do the inventory on a room to room basis. If the room is large and has a lot of personal property, divide the room into sections and do each section separately. The adjuster must be able to verify the inventory in order to recommend approval of your claim. If the inventory is chaotic, the approval will be delayed while the adjuster verifies your claim. A sample inventory form is attached. Check with the adjuster to see if it is necessary to inventory the undamaged items. Not all insurers require undamaged items to be inventoried on personal property. However, on business property nearly all insurers require a complete inventory after loss.

The inventory should show the qualities, the costs, the actual cash value and the amount of loss claimed. Actual cash value is synonymous with market value. If you are a retailer, market value normally would be your cost. Another measure of actual cash value is replacement cost less depreciation. Usually, on personal property, actual cash value is considered as replacement cost less depreciation. Depreciation is actually two components, physical wear and tear and economic obsolescence. An example in differences in physical wear and tear is a farm hand who will probably not wear out a business suit in ten years but will wear out a pair of work boots in two years. Whereas a businessman will wear out a business suit in two or three years but will not wear out a pair of work boots in ten years. Economic obsolescence is caused by changes in demand, technological improvement and design. An example of economic obsolescence is electronic calculators.

Do not dispose of any of your damaged or undamaged items until the loss has been verified by the insurer and its adjuster. If there is any dispute for any reason on the personal property, retain the items until the dispute has been resolved."The requirements in case a loss occurs" does not specifically prescribe a procedure for the building that is damaged or destroyed. The insurer may require you to produce verified plans and specifications for any building destroyed or damaged. Whether the property be real or personal, some method of fixing value or loss must be used to bring about an adjustment. The choice of the method will be determined by the nature of the property, the kind of loss or damage suffered, the information available about the property, the knowledge and experience of the adjuster and your own resources, ability and character.

Some of the methods commonly used are as follows; where the adjuster and you may: 1)inspect the property together and try to agree on a final figure, 2)make or have made for yourselves, separate estimates which you will compare and discuss in an effort to reconcile any differences, 3)select an expert or experts to examine the property and arrive at an agreed estimate of loss, 4)prepare or have prepared an agreed specifications for repair or replacement and submit these to be bid upon, 5)agree that you will repair or replace the property on an agreed cost basis under proper checks and guidelines and accounting for the cost with an agreement upon the betterment and depreciation, 6)accept the amount shown by the record of cost of construction or purchase, 7)fix the value of the personal property by agreement or appraisal with the insurer paying you for the value and taking the property for sale as salvage, 8)agree upon the value of any personal property and have the salvage sold and the proceeds paid to you. The measure of loss would then be the difference between the value of the items and the amount recovered. 9)The adjuster may exercise the insurer's option to repair or replace the property and 10)in case of a disagreement, the differences or disagreements can be submitted to an appraisal. Please refer to your insurance policy, "Requirements in case a loss occurs" .

For building repairs, my preference is to prepare an agreed specifications for repair and submit these to the contractors to bid upon. With a standard specification of repair, you have a basis for comparison of the bids. The specification of repairs should be detailed enough to avoid the problem of what is to be included and is not included. If the contractors feel any additional items are necessary, they can note these separately on their bids. The contractors' estimates, following the format of the specification of repair, make it much easier to compare itemized bids for their reasonableness and completeness.

As the owner of the property, you have the right to choose any contractor you wish to do the work. However, if you intend to make an insurance claim, the insurer also has the same right if they so elect. The insurer's concerns are the same as yours.

attached. The information required in the Proof of Loss is straightforward both in the form and in the requirements in case a loss occurs. Keep in mind that the Proof of Loss must be submitted to the insurer within sixty days of the loss unless the insurer extends the time in writing.

Many questions will arise after the fire. Purchase a small notebook that you can keep in your pocket and write down the questions as they occur to you. Submit the questions to your adjuster. If the adjuster cannot answer your questions or does not answer your questions to your satisfaction, ask your agent for assistance. If you feel you are being treated unfairly, let your agent know. Bear in mind that even the broadest of coverages does not cover everything. All policies have limitations.

As stated initially, the purpose of this article is to assist you. My purpose is not to interpret your policy, adjust your loss or offer legal advise. Review your policy. Above all else, be prepared to document your loss and claim. Don't hesitate to ask questions of the adjuster and your agent. They both want to see that you are treated fairly.