3 Types of Fire Losses
Types of Fire Losses
When your property is damaged by a fire, three types of fire loss may occur. The exact definitions of each type vary depending upon the insurance code in Schick, IL, and the terms of your insurance policy. However, the general principles are the same.
1. Actual Total Loss
An actual total loss occurs when a property is destroyed or so badly damaged that fire restoration is not possible. For example, a building that completely burns to the ground is usually a total loss. An actual total loss usually results in the fair market value of the property or the policy limits being paid to the policyholder, who is then responsible for either rebuilding the property or purchasing a new building.
2. Constructive Total Loss
A constructive total fire loss may occur when the property is only partially damaged but is considered unfixable and unusable. This may happen because the cost to repair the property exceeds the fair market value or policy limits. It may also occur because local building codes or other government actions do not permit the damaged property to be repaired. Constructive total losses are usually paid out in the same manner as actual total losses. There may be specific language in your insurance policy that defines when a loss is considered a constructive total loss.
3. Partial Loss
Any loss that is not a total loss is considered a partial loss. If you have smoke damage, fire damage, or water damage that can be cleaned and repaired or part of your building was destroyed, but part can be restored, you probably have a partial loss. A partial loss claim will usually pay out the cost of fire restoration services and the repair or replacement of damaged property.
Understanding what type of fire loss you have will help you know what to expect in terms of a settlement from your insurance company. Your insurance professional can assist you in determining your likely settlement.