Know Your Rights, Obligations If Home Is Damaged by Fire


What would you do if your home were severely damaged by fire or water? Many people put in a quick call to their insurance agent, set up an appointment with an adjuster and try to settle as quickly as possible.

According to some consumer advocates, following that scenario can cost you dearly. By proceeding in a more deliberate way and following all the procedures listed in the fine print of your homeowner’s policy, you can protect yourself against loopholes and exceptions that can cost you money.

Ron Alford, whose background includes 20 years as an insurance adjuster and a fire- and water-damage restoration specialist, is founder of the Owners Action Plan, a nonprofit group that advises policy holders and lobbies against what it perceives to be unjust practices by insurance companies.


Following is his advice on some of the most commonly asked consumer questions.

Policies Say the Owner Must Secure Premises

QUESTION: What should homeowners do first when they suffer a loss?

ANSWER: Most policies state that it’s the insured’s responsibility to secure the property from further damage. That means that if you allow some part of your home or its contents to sustain further damage, the insurance company doesn’t have to cover it.

If the carpet is waterlogged after the firefighters are through, and you allow mildew to grow under it, that’s your fault. If you fail to board up broken windows and looters carry off the TV, that’s your fault. If fire or firefighters have left a hole in the roof and the next day it rains, the resulting water damage is your fault because you didn’t meet your obligations under the terms of the contract.

To complicate matters, if you make the repairs yourself, you won’t be reimbursed for your trouble, since insurance companies will only pay for professional services.

Restoration Contractor Bill Is Paid by Insurer

Q: By professional services, you mean such as those of a fire- and water-damage restoration contractor? (Check the Yellow Pages of the telephone book for such contractors.)

A: Yes. If a licensed or certified restoration contractor submits an itemized bill, the insurance company will pay those expenses.

General Contractors Not on Emergency Call

Q: Why not hire a general contractor to make the emergency repairs? There are certainly more of them and they are easier to find.

A: Not at 3 o'clock on a Sunday morning. Besides, a general contractor is not in the emergency-services business. While a restoration contractor may hire subcontractors to do some of the work, his real specialty is getting things done right and in a way that meets insurance contract requirements. A general contractor may have the expertise to rebuild a wall, but he won’t know much about getting the smoke residue off your furniture.

Keep in mind that the work contract is ultimately between you and the contractor. If the job isn’t done right, the insurance company is not going to step in to sort things out. It’s the insurer’s job to pay for the restoration, not to oversee it.

If there are no certified fire- and water-damage restoration contractors in your immediate area, you may need to hire a specialist, such as a roofer or a carpenter, to secure the premises and stop further damage from occurring. But a restoration contractor is your best bet after that.

When You Should Notify the Insurer

Q: When should a homeowner call the insurance company?

A: A homeowner should notify the insurer and arrange for an appointment with an adjuster right after calling for emergency services. The adjuster will need to assess the damage as soon as possible to protect his company’s interests.

Taking Pictures of Damage Is Important

Q: Beyond notifying the insurance company, what additional steps can a claimant take to help support his claim?

A: One of the most important things you can do is to take pictures of the damage; a video is even better. Shoot the damage from every angle.

How to Select a Restoration Contractor

Q: How can a homeowner assess the qualifications of a fire- and water-damage restoration contractor?

A: Unfortunately, there are no national standards governing the training of fire- and water-damage restoration contractors. If a restoration contractor in your area is required to have a license, you should understand that that is a license to do business and not a guarantee of the contractor’s competence.

The best you can do to assure yourself that the contractor knows what he’s doing is to ascertain whether he is a member of the National Institute of Fire Restoration.

Also, ask for the phone numbers of his last five clients, and insist on an itemized contract of all work to be performed and materials to be used, and on a commitment to a completion date. If a contractor balks at any one of these requests, I’d move immediately to the next one on your list of candidates.

Don’t Settle Before Knowing Extent of Cost

Q: How can homeowners protect their interests when settling a claim?

A: Above all, don’t settle with the insurance company before you produce a comprehensive claim. Restoration work is more expensive than most people imagine. An on-the-spot settlement may sound good, but it may eventually fall far short of what you actually end up spending to get your home and life back to normal. Nor are you obliged by the insurance policy to settle for the lowest bidder when getting estimates from contractors on work to be done.

How Can Consumer Get Help in a Dispute?

Q: Short of a civil suit, how can an insurance consumer find affordable help in settling a claims dispute?

A: You should seek immediate help from your state insurance commissioner when you feel your insurance company is not acting fairly. This office will offer some recourse, but in the end, educating yourself offers the best protection.

Read the fine print in your contract. Document, in pictures every unusual item in your home, and if you think grandma’s ring is worth a million dollars, you’d better get the insurance company to agree in writing that it is before you buy its policy.

Public Adjusters Wield Much Power

Q: How are public adjusters paid, and how much authority do they have?

A: Most prefer to work on 10% commission of the total collection, and they wield plenty of authority when you sign with them on a contingency basis. In essence, you’ll give them a limited power of attorney.

If your public adjuster is ethical, fine. If not, that power can be abused without your knowing it. I suggest hiring a public adjuster by the hour; I’d rather pay $125 an hour and retain legal control. Good public adjusters can be worth their weight in gold.

RESOURCE The National Institute of Fire Restoration, 10830 Annapolis Junction Road, Suite 312, Annapolis Junction, Md. 20701. Send a stamped, self-addressed envelope, and ask for brochure “Emergency Tips.”