We experienced a total loss fire in January of 2014. All life, minus a few fish, made it out okay. Praise God! This story is a summation of lessons learned regarding insurance, rebuild/replacement options, storage preps, fire-proof safe survival, OPSEC, and much more. I hope you can learn and make adjustments based on this experience.
We had a three story colonial home with brick front, vinyl siding, and an asphalt roof. We poured a concrete foundation with a walk out basement, and we had a well, septic system, propane heat, and electric air conditioning and appliances.
Our OPSEC was compromised. The 40+ firefighters, insurance claims agent, and adjustors, as well as the crew contracted to clean up the debris all now know we are preppers. We were already leaning towards building somewhere new after the fire, but this convinced us to relocate, since our location and preps had been compromised. I can guarantee you we would have strangers knocking or kicking on the door to get in when the SHTF, if we stayed.
Insurance Policy Things To Know
You will have two claims, and perhaps a third if your vehicle and trailer go up in flames as ours did. The vehicle and travel trailer fall under the automobile insurance policy, and I think most of us know how to deal with that. Just keep in mind that you get replacement value, which is based on its year/make/model/mileage/condition rather than its worth to you personally.
First, you will have a structural claim. This is based on a replacement cost to rebuild your home. We are talking about a total loss situation here. Some policies also have an additional provision around 20% above that replacement cost, called extended warranty coverage or something like that. Let’s use $100,000 as your policy replacement cost for your home. If your house was a total loss, the insurance company may give you up to $120,000 to rebuild your home. That extra 20% covers inflation of cost of goods to rebuild and/or services to rebuild. If we do experience rapid inflation, be sure to adjust your policy accordingly. Most importantly, realize that any funds you get from the insurance company for the structure will be made out to you AND the lien holder. This means that if you have a mortgage on your structure, you cannot cash those insurance checks. That would require the signature of the mortgage company, who has a vested interest into that home being rebuilt back to the asset value. Therefore, the mortgage company will treat those funds basically as a construction loan. My particular insurance company, well known and advertised, will not require you to rebuild using their own contractors. That is all up to you. You will have to work between the contractor and the bank to release those funds at milestones, as the work is completed. As you can imagine, that can often lead to some challenging times. Your only other option is to pay off the remaining loan balance to the mortgage company, and then you are free and clear to do what you want. We were fortunate enough to be able to take this route. We paid off the mortgage company with the insurance check, kept any remaining funds, and had free title of the land. The insurance company had a structural engineer come on site and validate that the poured concrete foundation was still functional and had not been compromised by the fire, heat, or water. We asked the insurance company for a copy of the foundation validation from the engineer, so we could use that in the resell of the land. We still had the well, septic, driveway, foundation, and the land itself. We worked with a trusted agent and ended up selling the land to a local builder. You’re most likely going to have the best luck selling to a builder in this kind of case. Also, know that land sales typically have a commission rate for the agent(s) of 10%. Because there was no structure, this was regarded as a land sale. However, we got lucky and walked away with 5%, because the buyer didn’t have an agent and just had a lawyer review the transaction documents, thus avoiding the additional 5% fee for me. That made the offer that much more attractive. We sold the land and walked away from the property. Fruit trees, gardens, berry bushes, out buildings all went bye-bye. That hurts. However, we are grateful and feel blessed to be able to come out of this like we have.
Secondly, you will also have a personal property claim. Our insurance company uses a supposed industry standard of 75% of the structural value as the amount covered for personal property. YMMV. For example, if your structure has a replacement value of $100K, then they will cover your personal property for $75K. Personal property is defined basically as everything that would fall out of the house if you shook it upside down. So, those of you with more than that figure would need to make adjustments to your policy. Also, there will be caps or limits to particular categories of personal property. You need to read this section carefully as everything from jewelry, guns, cash (usually limited to a few hundred dollars), precious metals (usually considered as cash), food, and more may have a limit to the payout of the coverage. You will need to put a separate “rider” on your policy to cover those assets. After the fire/flood/tornado/hurricane, you will be required to list on a spreadsheet everything that you owned. For example, you would list everything you lost, such as:
Item 1: 4 x4 wooden kitchen table with walnut finish and four legs. Four chairs, all wooden with pillowed seat and wooden legs in a walnut finish. Bought approx. 51 months ago at a cost of $1500.
If you don’t know the make/model, then they will want to know where you shopped so they can come up with a replacement value. As you can imagine, if you lost your entire home then this process can be overwhelming. I recommend you do it room by room and split it with your spouse. Then you each look over each other’s work and add to it, adjust numbers, et cetera. The more detailed you are, the better off you will be. I also recommend you take either a video and/or some sort of inventory list in advance of any such disaster, so this process is easier. We had a video that was in our safe, which did survive (more to come on that), and it was smoke damaged. We took it to a local camera shop, and they converted it to DVD for us. That worked well, and we were able to have something to jog our memory. The tape was done about 5 years prior to the fire, so I also suggest you make a point to update your video/lists on a yearly basis. Strangely, the insurance company never did ask to see my video, even though I told them I had it. I believe that may have been because they believed we were credible and not trying to scam them. I wouldn’t assume that would be the case in all situations, and you may want to be careful in even mentioning you have it unless you get some sort of pushback. I also had to come clean with the personal property claims agent (different person then the structural claims agent) that I was a prepper. I basically said I do some things like the wackos on the TV shows, but I am not wacko and flashed a smile. I mentioned that I’d be claiming lots of food and perhaps other unconventional numbers and assets that may look different to most other claims. I knew my OPSEC was blown at this point anyway, so I just came out with it and prepared them early about what my PP (Personal Property) claim may look like.
The insurance company will come back with an itemized list based on your claims and provide you with the ACV (actual cash value) of each asset. That ACV number is what you will receive in the form of a check. They will also have a summary sheet that is a “Recap by Category with Depreciation”. This sheet is what we will refer to going forward. They took each item on my list and put it into a category. For example, furniture, health & medical supplies, electronics, and so on. There are close to 35 categories on the sheet. There are three columns next to each category. ACV (Actual Cash Value), RCV (Recoverable Cash Value), and Depreciation. For example:
This means that you were given a check for $39,142 for all of your household furniture, based on its replacement cost minus depreciation. You can reclaim the depreciation value ($29,552) assuming you have not maxed out the PP policy cash limits at this point. Let’s assume you have not maxed out. In order to claim that depreciation value, you will have to physically replace the asset(s) and submit receipts for each item. This is where it can get confusing. Each category has a set percentage of depreciation associated with it. For example, major appliances depreciate much faster than jewelry. Jewelry has approximately a 28% depreciation rate, YMMV, and major appliances have a 62% depreciation rate. In the above example, furniture has a depreciation rate of 43%. Take Depreciation/RCV. So, for every $1,000 I spend to replace furniture, I will get $430 of that Depreciation category ($29,552) back to me as I replace those assets. However, you cannot exceed that recoverable depreciation in any one category and not beyond the total ceiling on your policy itself for personal property. To put the prepper spin back on this, here are a few categories of interest and what our policy provided as the depreciation percentages.
- Firearms & Accessories – 11%
- Books – 50%
- Sporting Goods and Outdoors – 40%
- Health and Medical Supplies –13%
- Perishable & Non-Perishable (Food) – .1%…..they basically gave me full value for my food stocks.
- Electronics – 42%
It’s interesting to me to see these categories and the percentages, because it gives you a really good view of where to put your investment dollars. I was surprised at the low return on books, but I don’t think they know how much we value information and reference materials.
Safes and Things That Go “Boom”
I had a modular Dakota safe and a small “fireproof” Sentry safe. They were saved but had some heat and smoke damage. This was because the fire chief on site asked me if I had anything specific to try to save and I gave him the locations of the safes. The firefighters were in a total defensive mode at this point, and he just wanted to focus on any particular valuables and put the water there. We didn’t live near a fire hydrant, just like most of us living in the boonies don’t, so they had to bring tankers to the fire. There just weren’t enough tankers and water to save the house. The safe and its contents had smoke damage (not good for firearms but can be fixed) and some water damage in the bottom (stocks, hardware, et cetera), which also can be fixed. The firefighters were not too concerned with the ammunition, as it apparently has a very small diameter radius in which it flies off when under that much heat and fire. I believe there was an article/link submitted a few weeks ago in SurvivalBlog about this.
A Few Other Notes
- You will get replacement value for the structure only. You will not get what it’s worth at full market value in your location, if you were to sell it.
- God bless good friends and family to get you through these times.
- The people that gave the most and helped out our family the most were the folks that had the least. The well-to-do crowd did next to nothing. I found this surprising, though I guess in hindsight I shouldn’t have.
- This kind of thing takes a serious emotional toll on you. No matter the disaster someone may go through, they will NEVER forget it and never not stop smelling weird smells, hearing weird sounds, or being alerted to some other thing. I can’t imagine what our soldiers go through and have to live with for the rest of their life, especially considering how young some of them are. PTSD is real, and I think we all need to do our part to help them.
- Regarding data backups, put your personal and important digital files on an external memory stick and in your safe and/or at your prepper friend’s house. You can also store your data in the “cloud” with Mozy or one of the many other online storage vendors. They encrypt the data in flight and at rest, but trust who you will with this. Do the same with your video or list of personal property. Update this data often.
- Disasters happen. I don’t care how prepared you think you are, because if the Good Lord wants to take it away, He will. You have to trust in His plan. A good sense of humor and those friends and family mentioned in #2 above help as well.
- You will feel very naked after this type of event. You have to rebuild your preps, and it helps going back to think about how you wish you started. Remember to start with a little bit of a lot and work your way to a week, two weeks, then a month, and longer periods of preparations for eventuality you’ve been preparing for.
- Being prepared financially with little to no debt helps in so many ways. Being prepared spiritually with a relationship with Jesus Christ helps immensely. Being prepared with a great spouse and family and great relationships helps. Being prepared with data and non-insurable items, or not-insured, in a safe place no matter what happens is helpful.
- Take fire safety in general more seriously. The fireman commented as I watched my house burn down how today’s homes go up like tinder boxes because of how they are built. Have alarms, smoke detectors, CO detectors, and extinguishers everywhere, and know where they are automatically. I’m considering one in my car as well.
- Have an escape plan worked out and practice it. We did a few times and decided we’d all meet at the mailbox at the end of the driveway. Those instincts kicked in. We had a two-story ladder in an upstairs closet as well. We didn’t need it, but it’s better to have it and not need it then need it and not have it.
- Fires can start from the outside (where there is no smoke detector) and get out of hand quickly before you become aware of it. Put a smoke detector in your garage as well. Maybe even put one outside.
- We are rebuilding with Hardie-Plank siding, which is rated as brick since it is a cement fiber board. It is fire resistant, if a fire starts outside. A metal roof would be ideal if you can afford it. Think CASTLE! Read JWR’s book on homesteads and how to build.
- From a nine year old… listen to your parents, remember the drills we learned, and go to the mailbox. Don’t be afraid. You will be stunned. Find a parent and GET OUT!!! If I couldn’t find a parent, I would find the closest phone and grab my pet(s) and run outside to the mailbox and call 911.
- From a nine year old and from his parents… think positive. After the event, realize that you will get your stuff back and better things. You still have your family and parents (hopefully). Good people will come to help you.
From a nine year old… help your neighbors! We did so many times, and they came to help us with everything from shoes to coats, and to watching me while things were happening. They comforted me and got me away from the scene.
As you can imagine, this is a long and arduous process and a constant OPSEC nightmare. We are currently in a rental property being paid for by the insurance company (for a limited time), while we rebuild somewhere new. I want to get most of this done before I have to give them my new permanent address. I will still always feel compromised, unless I left the state, but that is not an option at this point. We will come out better off from all of this. If you don’t believe you will, then you won’t.
Thanks for all you guys do at Survival Blog. God Bless.