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Rocky Mountain Insurance Information
NEWS
6565 South Dayton St. #2400, Greenwood Village, Colorado 80111
Serving Colorado, New Mexico, Utah & Wyoming
Contact: Carole Walker, Executive Director
(303) 790-0216 or 1-800-355-9524
Release Date: Immediately
Topic: Catastrophes
INSURANCE PRICE TAG ON 2002 COLORADO WILDFIRES SO FAR ESTIMATED AT $79.3 MILLION
July 8, 2002 –The overall estimated cost of the Iron Mountain, Coal Seam, Missionary Ridge and Hayman Fires in Colorado is $79.3 million in insured losses. Companies have taken in about 1236 claims so far for the Hayman and Missionary Ridge Fires at an estimated cost of $65.4 million. That estimate of insured losses includes claims resulting from burned homes, personal belongings, smoke damage and additional living expenses. Government officials have reported 166 primary structures destroyed in those fires. These are preliminary insurance industry estimates and could change as claims continue to be reported to insurance carriers.
“As damage estimates mount from each fire, Colorado is clearly in the midst of the most costly wildfire season in its history,” says Carole Walker, Executive Director of the Rocky Mountain Insurance Information Association. “And while the current insurance losses are still relatively low in comparison to past catastrophes, this is a wake up call to the devastation that wildfire can exact.” Wildfire insurance costs hinge on a number of factors, including the number of primary homes in the area (as compared to vacation homes and cabins), their estimated value and the amount of insurance coverage on the properties.
INSURANCE COSTS OF COLORADO WILDFIRES
- Hayman Fire (SW of Denver) & Missionary Ridge Fires (near Durango) $65.4 million (combined)
- Coal Seam Fire (near Glenwood Springs) $6.4 million insured losses
- Iron Mountain Fire (near Canon City) $7.5 million insured losses
Catastrophic fires account for 3% of insurance losses. That compares to 33% for hurricanes, 32% for tornadoes and 13% for earthquakes. The 2000 Hi Meadow and Bobcat Fires in Colorado caused an estimated $18.5 million in insured damage.
The Rocky Mountain Insurance Information Association has this advice for affected homeowners filing claims after the fire:
Step One: Adjusting Your Claim
- When you are allowed back into your home contact your insurance company to set up a meeting with a claims adjuster. An adjuster will inspect the damage to your home and offer you a certain sum of money for repairs. The first check you get from your insurance company is often an advance against the total settlement amount. It is not the final payment.
- If you're offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can "reopen" the claim and file for an additional amount. Most policies require claims to be filed within one year from the date of disaster.
- When both the structure of your home and personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. You should also receive a separate check for additional living expenses that you incur while your home is being renovated.
Step Two: What About My Mortgage?
- If you have a mortgage on your house, the check for repairs will generally be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowner’s policy and that they are a party to any insurance payments related to the structure.
- The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Bank regulators have guidelines for lenders to follow after a major disaster.
Step Three: How Do I Select a Builder and Who Pays?
- Hiring a reputable builder to do repairs or construct a new home is critical. Word of mouth is still one of the best ways to choose a contractor. Also check with the area Home Builders Association, Better Business Bureau or Chamber of Commerce. Make certain they are licensed and have adequate insurance coverage.
- Some construction firms require you to sign a form that allows your insurance company to pay the firm directly. Make certain that you're completely satisfied with the repair work and that the job has been completed before you let the insurance company make the final payment. The construction firm will bill your insurance company directly and attach the "direction to pay" form you signed.
Step Four: What About My Stuff?
- Add up the cost of everything inside your home that has been damaged in the disaster. Review your personal inventory, to help you remember the things you may have lost. If you don’t have an inventory, look for photographs or videotapes that picture the damaged areas. For expensive items, you may also contact your bank or credit card company for proof of purchase.
- Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings.
Step Five: How Do I Get By While My Home is Repaired or Rebuilt?
- Additional Living Expenses. Your check for additional living expenses should be made out to you and not your lender. This money is designed to cover your expenses for hotels, car rentals and other out-of-pocket expenses you may incur while your home is being fixed.
Step Six: Options for Rebuilding
- Rebuild your home on the same site. The amount of money you’ll have to rebuild your home depends on both the type of policy you bought and the dollar limit specified on the first “declarations” page of your policy. Generally, you are entitled to the replacement cost of your former home, providing that you spend that amount of money on the home you rebuild.
- Decide not to rebuild or to rebuild in a different location. The amount you’ll get from your insurer will be determined by your policy, state law, and what the courts have ruled on this matter. If you decide not to rebuild, review your policy and ask your insurance agent or company representative what the settlement amount will be.
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Rocky Mountain Insurance Information Association is a non-profit consumer information organization. Affiliated with the Insurance Information Institute, RMIIA has been serving consumers and the media since 1952.
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