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Fire Loss Examples


There are a number of examples that come to mind from the past year that we can learn from.  One day when discussing limits of coverage with an insurance company representative he told me that it is common for the limit of coverage to be too low.

One example is a barn fire, the cost to clean things up so they could rebuild it equaled to 10% of the total rebuilding cost. On a $3,000,000 barn that is $300,000. I wonder if they had allowed for that when choosing the dollar amount of coverage.

Another example is a small farm workshop. After the fire, the estimates to rebuild this particular shop came in at $45 per square foot which included the cost to clean up the debris. I wonder if they had enough insurance. I was also told about a single detached car garage that was insured to half of its cost to rebuild and he told me of another situation where there was an un-insulated workshop that received a total makeover including insulation, heating system, wiring, new insulated overhead door, etc. This farmer did not make any changes to his insurance policy, so it was not a happy day when he realized he was drastically underinsured, of course, after the fire destroyed it completely.

Often the tools and repair supplies in these workshops are not insured to the adequate amount. When you take the time to write up a list, after the fire, it often adds up to being worth more than the limit on the policy.