by Mary Lago, CFP®, CTFA
Chief Wealth Strategist
Principal
What are the odds that two employees at Ferguson Wellman have parents who lost their homes in wildfires? The chances seem pretty slim through the windshield, but very real through the rearview mirror. Unfortunately, it is all too easy to believe we are immune from these losses.
We assume disasters only happen to other people and fail to prepare for them. With the benefit of hindsight, we encourage a review of your insurance coverage and to take a few other precautionary measures to lessen the negative impact from fires, storms or other unexpected events.
Speaking from personal experience, the loss of a family home and personal belongings is disruptive from both a practical and sentimental perspective. Avoiding surprise gaps in insurance coverage can lessen the trauma. In reviewing your policy, be sure to consider (1) the amount and general nature of your coverage, (2) deductibles and (3) limitations for both your dwelling and personal property.
With rising building costs, it is important to re-evaluate your dwelling coverage limits with your insurance agent and make necessary adjustments. You will want to verify that you could rebuild your home including any remodels or home improvements, to the desired quality and current building codes. Some policies allow for a defined percentage of overages to cover higher rebuilding costs, and this may be a consideration in establishing your limit.
The contents of your home or personal property are often insured as a percentage of your dwelling coverage. Typical contents coverage ranges from 50% - 70% of your dwelling limits. In other words, you might be eligible for $500,000 - $700,000 of personal property reimbursement if the dwelling is insured for $1 million. To be eligible for reimbursement, you likely need a detailed list, evidence that you owned the items and their value. Documenting your belongings and ensuring access to that documentation—even if your home was destroyed—can greatly simplify the claims process and the emotional drain of recalling the items you no longer have.
Paradise, California in 2018. Source: NBC
An important part of understanding your personal property coverage is to know the nature of your coverage and limitations. Some policies reimburse personal property at “actual cash value” and others at “replacement cost.” “Actual cash value” results in lower reimbursement rates as the value of items is reduced by depreciation. “Replacement cost” represents more comprehensive coverage and is worth exploring as an endorsement (if not included in your base policy). Additionally, items such as jewelry, coins, precious metals, cash, guns, art, wine and other collectibles are subject to stringent limits without specific endorsements.
Pacific Palisades, California in 2025. Source: Getty Images
In reviewing your insurance, double check that your policy covers the named owner of the property. In other words, the title on the deed needs to match the listed insured on the policy. As we engage in estate planning, it is not uncommon to retitle our homes into the name of a revocable living trust, LLC or an irrevocable trust. Such changes should be coordinated with your insurance agent so that they can include any additional trustees, managers and/ or entities in the policy.
Protecting the value of your home is important from a financial perspective. Being prepared with an emergency plan of how to connect with family, ensuring access to medications, protecting pets and preserving memories are also worthy of consideration.
Examples of Good Planning Include:
Developing a family plan in the event of an emergency including a key contact, evacuation route and meeting point.
Keeping an emergency kit, extra medications and a cell phone charger in your vehicle
Periodically documenting the contents in your home with a video or photos
Backing up family photos, personal files and financial documents in the cloud
Making a list of important items you would like to pack if there is adequate time
Most of all, once disaster strikes, focus on personal safety!
If you have any questions, the team at Ferguson Wellman and West Bearing can assist, whether it be preparing for a disaster or recovering from an unexpected loss.
Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational and informational purposes only and not as a substitute for qualified counsel. You should consult qualified professionals to understand how this information may, or may not, apply specifically to you.