I made a $7.5K homeowner’s insurance mistake after California’s fires

December 2017 brought what was then the most damaging wildfire in California history just feet from my front door. By the end of the ordeal, six homes burned down within a block of my house. While I escaped the serious damage, I later learned that I wasn’t completely out of the woods when it came to fire damage.

A few months after the fire, I climbed a ladder into my attic to check on an issue with the air conditioning in one room. While investigating, I discovered a layer of ash covering everything in my attic.

With the new discovery, I figured it was time to file a claim with my insurance company. The results were not at all what I expected. Here’s why you should never delay when filing a claim with your homeowner’s insurance.

Timely filing requirements

If you experience a covered loss, insurance companies require you to file a claim in a timely manner. This makes sense for many reasons. If you delay, there’s a chance the damage could get worse. It can also make it harder to assess liability when deciding who is at fault and has to pay.

Shortly after the fire, a friend advised me to file a claim right away for smoke damage. But as an ethical person, I didn’t know of any smoke damage in my house and didn’t file a claim. I should have listened to my friend.

Doing the right thing ultimately cost me about $7,500. I didn’t know about any smoke or ash issues outside of a little ash in the windowsills, so I didn’t file a claim. I figured we could clean that ourselves.

But the ash in the attic had me worried about a need to replace our insulation or do a more thorough cleaning. Immediately upon discovery of the issue, I filed a claim.

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The insurance company said I should have known about the issue closer to the fire date. I don’t know about you, but I don’t go into my unfinished attic more than once a year unless there’s an issue up there. But because it was more than 90 days after the fire, the limit my policy gave me, my claim was severely restricted.

The delayed discovery rule didn’t come to my aid

My insurance policy says that I have 90 days to file a claim after a loss. But because I didn’t discover the loss soon enough, I got a letter from my insurer saying I would get only about 25% of the benefit I should. I was pretty mad, and I wasn’t going to take it sitting down.

First, I did some research and found a California law that protects insured individuals called the “delayed discovery rule.” Because I didn’t know about the damage, the 90-day clock should start when it’s discovered, according to the rule.

The insurance company said it didn’t apply. I sent a complaint to the California Insurance Commission, which got me a letter from both the state and the insurer, but no resolution. I spoke to a lawyer about it, and he advised sending a letter appealing the decision based on my having had a baby during the fire, but that didn’t go anywhere either.

Apparently the law doesn’t cover my situation, which I still don’t understand. But I wasn’t going to spend $5,000 on a lawyer to chase $7,500. So I let it go and accepted the 25% payout. But I’m still not happy and want to make sure the same thing doesn’t happen to you.

Insurance companies work hard to not pay a claim

Insurance companies make money in several ways. If you ask Warren Buffett, CEO of a company that controls multiple successful insurance businesses, the most important way an insurer makes money is “float,” which is investing cash between when you pay a premium and when a claim may be paid out.

But if they can avoid paying a claim altogether, that’s just profit in their pocket. That is why insurance companies employ legions of lawyers, adjusters, and other professionals who work hard every day to make sure they keep as much money as they can.

As an insured individual, you have to stand up for yourself to make sure you get the appropriate payout when you deserve one.

Be aggressive in dealing with insurance

If you have any doubt that you’ll need to file a claim, take the time and do it as early as possible. A delay cost me about $7,500. Don’t let the same thing happen to you.

Whether it’s a home, auto, health, or other type of insurance claim, it only takes a few minutes to call or start a claim online. If I had done that, I wouldn’t have lost out. It’s an expensive lesson to learn. But if you move quickly, it’s a lesson you can completely avoid.

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