Rental Property Caught Fire - What Happens Next? (Pics included)

[Sean Williams]

First and foremost, thank God no one was hurt or killed!

Thursday I got the call as a landlord you never want to get: "The house is on fire!"

Naturally I had to do a double-take to make sure I heard correctly, as you never think something like this would actually happen to you. As you'll see below from the photos, the damage was pretty severe - including smoke and water damage as well. Just a real reminder why it's CRITICAL to make sure you have proper coverage and to review your policy at least once a year to make sure it's sufficient. Luckily, I did not opt for the cheap route and appear to have pretty solid coverage (I did go with the higher deductible at $3k).

I would love to get some feedback or input from anyone that has dealt with this before. I'll share the basic details of my policy as well as the process we are being told to follow via insurance:

$55k +/- fair market value of home

$75k insured value classified as "replacement cost"

$3k deductible with fire, water and smoke damage coverage

$3k coverage on loss rents

$39k principal balance left on mortgage

We submitted the claim online with the photos below. I am currently waiting on the Fire Report from the fire department which I should have in the next day or so. The insurance company said they would review and if deemed to be bad enough they would send out an adjuster to assess the damage (safe to say they'll need to send someone out ha!). In the meantime I have already contacted a local restoration company (Paul Davis, any other suggestions?) to give me an initial idea of what we're dealing with.

I have a hunch that the damage will be more than the FMV of the house...I have to believe this is $50k+ worth of damage by the time you factor smoke and water damage, plus electrical and structural components. There is a second floor not shown in these pictures that also has significant damage too...the entire house has smoke damage. I am just trying to get an idea of what the possible outcomes may be taking into account the cost of the repairs may be more than the market value of the property...do they just send us a check for the repairs, do they send us a check for the market value, do they send us a check for the replacement cost etc etc?

Also, any additional info on the "replacement cost" vs. "actual cost" what that means for us in this scenario would be appreciated too...