Fire Insurance: Does Homeowners Policy Cover Fire Damage?

Having the proper fire insurance through a homeowners insurance policy is crucial to avoid potentially ruinous financial losses from a fire.

Coverage within a standard home insurance policy can compensate you after a fire, including dwelling, other structures, personal property, loss of use and even liability coverage.

What Is Fire Insurance and How Does It Work?

Fire insurance is part of homeowners insurance and covers the cost of damages and losses caused by a fire. The coverage can pay to repair or rebuild your house and replace damaged personal property such as clothing, furniture and appliances.

Home insurance also includes loss of use coverage, which pays for your extra costs if your home is inhabitable after a fire and you have to live elsewhere during repairs. Loss of use costs can include lodging and restaurant meals.

A home insurance policy also provides personal liability coverage that covers you if someone (who is not in your household) is hurt or, in some cases, if another property is damaged because of a fire that started in your home.

Pro Tip: If you’re concerned about having enough dwelling coverage, you may be able to buy extended or guaranteed replacement cost coverage, which adds an extra amount to your dwelling limits if needed.

If your property is damaged by a fire, you can file a claim with your home insurance company. The insurer will review the damage and your policy to identify what’s covered and how much you’re owed, minus the deductible.

The company will pay up to your dwelling coverage limit for damage to your house structure. You may also be able to buy extended or guaranteed replacement cost coverage at an added cost. Extended replacement cost expands your dwelling coverage by a percentage, such as 25%, if the cost to rebuild your home exceeds the base dwelling insurance limits. That means if you have $300,000 in dwelling coverage, extended replacement cost coverage at 25% extra will reimburse you up to $375,000. Guaranteed replacement cost goes even further and pays whatever it costs to rebuild your house.

Extended or guaranteed replacement cost coverage can play a key role in getting enough insurance reimbursement to rebuild your house, especially during times of higher inflation or a widespread disaster that creates increased demand for construction. In these cases you may find that your dwelling coverage isn’t sufficient and you need to tap your extended or guaranteed replacement cost coverage.

The exact amount you’ll get for damaged personal property hinges on whether you have replacement cost or actual cash value coverage. Actual cash value coverage reimburses you for personal property minus depreciation, while replacement cost coverage pays to replace the damaged property with new, similar items.

What Types of Fires Are Covered Under Insurance?

A homeowners policy covers accidental causes of fire, including:

  • Wildfires
  • Cooking and grease
  • Candles
  • Electrical issues
  • Gas leaks
  • Heating problems
  • Lightning strikes
  • Power surges

What Types of Fires Aren’t Covered Under Insurance?

Home insurance won’t cover all causes of fires, including negligence and fires set by the homeowner (arson).

Preventable fires may not be covered by your policy. For instance, If a fire starts because you didn’t properly clean and maintain your chimney, the insurance company might not pay for the damage.

If you reside in an area susceptible to wildfires, you might find it challenging to get a homeowners insurance policy that covers wildfire damage.

Different Types of Home Insurance Fire Coverage

Fire protection within a home insurance policy is found in several coverage types.

Dwelling Coverage

Dwelling coverage pays for the cost of rebuilding or repairing your home’s structure as well as attached structures, such as a garage. It will pay up to your dwelling coverage limit unless you have expanded coverage like extended replacement cost coverage.

Other Structures Coverage

Other structures coverage pays for damage to detached structures such as sheds, fences, decks, canopies, pergolas, gazebos and detached garages.

Personal Property Coverage

Personal property coverage pays for damage to your belongings, such as furniture, electronics, appliances and clothing. You can typically choose between actual cash value and replacement cost coverage, which is more expensive but provides a higher amount of reimbursement if you file a personal property damage claim.

Loss of Use Coverage

Loss of use coverage can pay for your extra costs if you must vacate your home while it’s being rebuilt or fixed after a fire. That may include a temporary hotel stay. This is also sometimes called additional living expenses coverage.

Personal Liability Coverage

Liability insurance covers you for injury to another person or damage to their property for which you’re legally liable. For example, a fire at your home spreads to a neighbor’s house. You’re found liable because of negligence, such as an unattended candle sparking a blaze, and they sue you for damages. Personal liability coverage will cover the expenses involved in a lawsuit, including settlements and defense costs.

How Much Does Fire Insurance Cost?

The average homeowners insurance policy costs $1,582 a year for a policy with $350,000 of dwelling insurance, according to Forbes Advisor‘s analysis. You don’t have to buy separate fire insurance, as it’s included as part of a home insurance policy.

Your dwelling coverage limit should align with the estimated cost of reconstructing your house.

Factors that influence the cost of home insurance include:

  • The cost to rebuild your home.
  • Your home’s location and age.
  • Materials used to construct the house, including wood, brick or stone.
  • The location’s fire rating, including the nearness of hydrants and a fire station.
  • Claims history (yours and the property’s).
  • Your coverage and policy limits.
  • Policy’s deductible.
  • Your credit (except in California, Maryland and Massachusetts).

How to File a Fire Insurance Claim

If your home suffers a fire, you’ll want to take these steps when filing an insurance claim and avoid home insurance claim mistakes.

  1. Limit further damage. If you can do so safely, it’s wise to prevent further damage to your property immediately after a fire. For example, if a window is broken because of a problem covered by a home policy, you can prevent further damage by boarding the window to keep out rain.
  2. Evaluate and document losses. Take thorough photos and videos and make lists of all damaged property. If possible, gather receipts and proof of purchase of any items you’ll list on your claim. Be proactive and create a home inventory before you ever need it.
  3. Contact your insurance company as soon as possible following the fire. Try to contact your insurance company the same day of the incident or as soon as possible so you can begin the claims process.
  4. Prepare to provide information to your insurance company. This might include the date and time of the fire, a recap of what occurred, the fire department/police report and your videos, photos and written documentation of losses.
  5. Meet with a claims adjuster. An adjuster from your insurance company will be dispatched to your home in the hours or days after you report a claim. You can also hire a public adjuster, which is an independent insurance professional that helps homeowners make sure the claim is settled fairly and efficiently.
  6. Get paid by the insurance company. After conducting an investigation, the insurance company will decide whether to approve your claim and how much you’re owed, minus your policy deductible.

By being proactive after a fire, you can shorten the claim processing time. While any fire damage is stressful, having the right documentation and following up with your insurer will pay off.

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