What Happens to Your Insurance Policy After a Fire?
What Happens to Your Insurance Policy After a Fire?
Tom B. who lost his building in Altadena during the Eaton Fire, he was left with a big question: What happens to his business insurance policy now that his building is gone?
Tom B. who was insured with State Farm for decades, called his agent as soon as possible. He was surprised to learn that he still had to keep making monthly insurance payments-even though his building no longer existed.
To be paying for something that’s not useful anymore, we don’t know when it’s going to be built, whether it’s going to be built in a year or even a few years later.
Why Keep Paying for Insurance on a Lost Building?
An insurance agent explains that business insurance works differently than homeowners insurance. Even if your building is destroyed, keeping your policy active is often the smartest choice.
Here’s why:
Liability protection: Even without a building, you still own the property. If someone gets hurt on your land-whether they should be there or not-you could be held responsible.
Easier rebuilding process: If you cancel your insurance, getting a new policy when you rebuild could be tough. After a major loss, you may not qualify as a preferred customer, making new coverage harder to secure.
Possible premium adjustments: While you still need coverage, you might be able to lower your premium.
How to Reduce Your Insurance Costs After a Fire
Dinger advises business owners to work closely with their insurance agents to adjust their policies and save money where possible. Some options include:
Adjusting rating factors to reflect the current state of the property.
Increasing deductibles to lower monthly payments.
Modifying coverage to fit your rebuilding timeline and needs.
State Farm also recommends that customers recovering from a loss speak with their agent about ongoing coverage needs to ensure they’re protected during the rebuilding process.
While it may seem frustrating to keep paying insurance on a property that no longer has a building, maintaining coverage can protect you from liability and help secure a policy when it’s time to rebuild. If you’re facing a similar situation, talk to your insurance agent about possible premium reductions while keeping the coverage you need.