Type of insurance can make a big difference when it comes to home fires

While wildfires may grab the headlines in Southern California, home fires are a threat to homeowners and renters, and the kind of insurance you carry can make a big difference.

When it comes to your insurance, there are important differences in coverage for a wildfire versus a fire that starts inside the house.

In Southern California, much of the focus is on fires that start beyond our front door, wildfires. But homeowners and renters need to ensure they have adequate coverage if a fire starts inside the home.

"Some policies will actually have a different deductible for house fires versus wildfires," said insurance expert Karl Susman. "The wildfires will have larger deductibles. The house fires are typically just your standard deductible that you have on your policy."

Susman said homeowners should consider the extent of the damage before they file a claim.

"Once I've met that deductible, maybe it's going to cost $7,000, so you say, 'Well, that's over my deductible. I should file it,'" Susman said. "Then you want to ask yourself, 'Do I want to have a claim to get $2,000 back?' The answer might be no, especially if you can write that check anyway."

Susman said homeowners also tend to get better deals when they're the ones writing the check.

"When they see an insurance company involved, the rates go up on what they're going to charge versus if you tell them, 'Look, I'm paying this out of a pocket, what's the best you can do for me?'" Susman said. "I've seen rates that they're getting quoted half of what they are getting quoted to the insurance companies."

Susman explained that multiple factors can determine how much your premium will increase if you file a claim.

At the very least, Susman said you'll lose your claim-free discount, which typically saves you 10% on your premium.

The new year is a good time to ensure your home is fire-safe. Start by checking your smoke alarm, changing the battery, or, if it's hard-wired, doing a system test.

"Another thing to be assured is that you have fire extinguishers in the house, and that they work, and you know how to use it," Susman said. "A lot of times you'll buy it, and you've tucked it underneath the table or put it wherever in the cabinet. Nobody knows how to use it. And a fun fact, they expire."

Susman recommends replacing them every couple of years.

If your insurance broker uses a model to determine the cost to rebuild, Susman said, keep in mind that contractors are charging upwards of $500 a square foot right now due to increased construction among Palisades and Altadena fire survivors. The industry-standard $ 300-per-square-foot rate no longer applies in Southern California.