A fire in your home can be both emotionally and financially devastating. Even with the best, most comprehensive insurance policy, you are likely to end up facing additional out-of-pocket costs throughout the process of rebuilding your home and replacing your belongings.
Budgeting is a challenge at the best of times. Managing your finances throughout the process of filing a home insurance claim can be even more nerve-wracking.
1. Get Help with Your Claim
Getting an unsatisfactory claim amount can be financially devastating. It makes a lot of sense to get help with your insurance claims, especially when your claim is for a significant amount.
Help can come in the form of an insurance lawyer or public adjuster. They help make sure that your insurance claim settlement covers as much as you are entitled to in your policy. Their involvement will make a major impact on your finances in the end.
2. Talk to Your Mortgage Company
After a fire, one of the things you may want to do is contact your mortgage company and ask about relief from payments, also known as mortgage forbearance.
Even if your home has completely burned down, you still have to make mortgage payments. You should keep up with your mortgage payments, even if it is difficult to do so.
However, your mortgage lender may agree to a mortgage forbearance for an agreed-upon period of time. This is something to look into.
3. Replace the Essentials First
After losing your belongings in a fire, the prospect of getting everything back together can feel overwhelming. It can help to start with the basics, including:
- Essential clothes
- Phones and laptops
This is a great place to start while you work out other aspects of your finances, such as getting a cash advance. There are also organizations like the Red Cross that can provide emergency help right away.
4. Find Out How Much the Insurance Will Cover for Contents
Before you start replacing other belongings, you will want to settle your insurance claim and find out exactly how much you are getting to replace damaged belongings. Often you will need to create a Schedule of Loss which details the non-restorable personal contents affected from the loss. You should figure out from your insurance company whether you can begin replacing certain items and submitting receipts for full reimbursement. There is often a time limited period in which you can obtain full replacement cost as the basis of settlement.
Depending on the timeline of rebuilding your home, there may be no rush to replace things like furniture. If you can find a furnished condo to stay in while repairs are made, you may want to wait to replace furniture. However, your insurance coverage should help with storage costs in that instance.
5. Request an Advance
Your insurance company can provide immediate relief to help with the financial pinch that comes with finding a place to stay and replacing your essentials. An advance can help you cover the costs of booking a hotel or motel, getting takeout, and replacing essentials.
6. Budget Your Added Expenses
Once you have reviewed your insurance policy and you have a good idea of how much you will get from the insurance company for Additional Living Expenses, you will want to budget out those funds.
Rebuilding a home after a fire can take a long time. You will want to make sure your funds for Additional Living Expenses last so that you can avoid relying on credit cards or going into debt. It is important to have a timeline from the insurance company and/or contractor of how long you will be out of your home, and use funds accordingly.