Fire Insurance: How Does It Work?

​​Q: If I have a house fire, what should I do? 
A: Contact your insurance agent immediately after calling the fire department for help. Get the name of the person that you talk to, the claim number, and the adjuster’s name, and find out when the adjuster will contact you. If you get a recording, make a note of the day and time that you left a message.

Q: What should I do after I’ve notified the insurance company and before the adjuster arrives?
A: Secure your property once firefighters complete their work. A fire contractor (sometimes referred to as a “fire chaser”) may appear on the scene, even while the firefighters are still present, and offer to temporarily board up your house. The fire contractor also may try to get you to hire him/her to do the actual dwelling repair. Before you commit to having any work done by the fire contractor, ask if the contractor is bonded and whether the contractor will agree to accept the reasonable value placed on his/her services by the insurance company. Do not sign any agreement with any contractor to do the actual dwelling repairs until after you have consulted with the insurance company. Some carriers have a list of preferred contractors, and there may be benefits to using a contractor from this list.

Q: What will happen when the insurance adjuster arrives?
A: An insurance adjuster is responsible for assessing the damage to your home for the insurance company. The adjuster may take a recorded statement from you, give you an advance so you can buy new clothes, set you up in a rental unit if your house is unlivable, and generally explain the claim process.  Ask the adjuster for a complete copy of your insurance policy if you do not have one since the policy sets out “the rules of the game.” Also ask for a copy of your recorded statement and a written list from the adjuster of what steps you need to take to move the claim forward.

Q: What does my homeowner’s insurance policy cover?
A: All homeowner policies cover loss by fire and most common perils such as windstorm, hail, and vandalism. Most policies pay for three types of damage:  1) dwelling loss (damage to the house); 2) personal property loss (damage to your household contents); and 3) additional living expenses (the cost of living elsewhere while your home is being repaired).  

Q: How does the insurance company measure my loss?
A: Most homeowner policies are written on a replacement cost basis, which means that the loss is measured by the amount of money it takes to repair the house or replace the damaged personal property with new items. Some policies are written on an actual cash value basis, which means that the insurance company pays the depreciated value of the damaged item rather than its replacement cost. However, even most replacement cost policies only pay the actual cash value of the loss until the property is repaired or replaced.

Q: Who determines the amount of my loss?
A: Most insurance companies will prepare a dwelling repair estimate and then provide it to you to forward to a contractor of your choice. Some insurance companies have their own lists of preferred contractors, and will guarantee their work.

Most companies require you (the insured) to prepare your own personal property inventory, and will not provide any assistance other than giving you blank forms to complete. You can complete the forms yourself, but it is a lengthy and time-consuming process. For an extensive fire loss, it may be worthwhile to hire a professional contents appraiser or a public adjuster. Some insurance companies will prepare a list of the damaged personal property for you, and assign replacement costs and actual cash values to each item. You may challenge these figures if you believe that they are too low, and if you allow the insurance adjuster to prepare your list for you, the figures will likely be conservative.  

Q: What is a public adjuster?
A: Public adjusters are specially trained professionals who are licensed by the state. They represent policyholders only, as opposed to the insurance company adjusters who work only for the insurance company. Public adjusters are trained to prepare dwelling damage repair estimates and to value damaged personal property. They are generally knowledgeable about the coverages provided by a typical insurance policy, although they cannot offer legal advice. They generally work on a contingent fee basis, that is, for a percentage of the amount recovered.

Q: What if I do not agree with the insurance company’s valuation of my damages?
A: Most homeowner insurance policies contain a provision that allows an insured to challenge the insurance company’s assessment of the amount of the loss through an informal process known as appraisal rather than through the filing of a lawsuit. Appraisal is generally cheaper and faster than a lawsuit, so it is a good option for most policyholders.


This "Law You Can Use" consumer legal information column was provided by the Ohio State Bar Association (OSBA). It was prepared by attorney Robert P. Rutter, of the Cleveland firm, Rutter & Russin. 

Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.



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