The following article was taken from the Independent Insurance Agents & Brokers of America, Virtual University and written by David Thompson
On Oct. 4, 2009, while I was visiting my parents in Vero Beach, at 4:32 a.m. my cell phone rang, and the caller ID showed it to be my daughter. I knew it was not going to be a good call at that time of day. She said, “Dad, my apartment building just burned to the ground.” She lost almost everything she owned. But here is the good news…
On Oct. 4, 2009, while I was visiting my parents in Vero Beach, at 4:32 a.m. my cell phone rang and the caller ID showed it to be my daughter. She said, “Dad, my apartment building just burned to the ground.” She lost everything she owned, except for a small overnight bag she had with her; she was at her boyfriend’s house for the weekend… but I don’t want to talk about that.
Fortunately, all residents (and pets) got out alive. As she hung up with me that morning, her last words were, “Thank gosh my dad is an insurance nerd!” Just 52 days earlier, she had purchased (at her dad’s directive) an HO-4 (rental) policy, paying right at $230 a year for $30,000 of coverage on her contents.
Her HO-4 carrier paid a bit more than $28,000 for this loss. Not a bad deal at all — pay $230 and get $28,000 back.
At times, I still can’t believe that my daughter had a total loss fire. (It’s always supposed to be someone else.) Fortunately, she had the proper insurance, which allowed her to put her life back in order with very minimal disruption.
I have taken away several lessons from this event:
• It’s not always someone else who has the fire.
• Insurance does not prevent losses like this; it makes them easier to deal with.
• The $30,000 of contents coverage she had seemed like double what was needed when we bought the policy. The claim paid nearly the policy limits. Contents add up fast.
Documentation is key; she had none. The day after her fire, I took a digital camera and went through my house, taking over 180 photos of my “junk.” I have those photos stored at four different locations, over two computers, an online service, and at the house of a family member in another state.
The $230 my daughter spent on an HO-4 is a better deal than any BBQ I have ever had… and that’s a darn good deal.