Types of coverage, how it works, limits

Most standard homeowners insurance policies come with coverage that protects your home from fire damage. You can also purchase separate fire insurance to supplement your existing coverage if you have a second home or live in an area that is more susceptible to wildfires.

In California, for example, more than 2 million properties are at high or extreme risk of being damaged by a wildfire, according to Verisco, an insurance risk data analytics company. Other states with elevated levels of wildfire risk include Texas, Colorado, and Arizona.

What is fire insurance?

Fire insurance pays for repairs and replacement if a fire damages your home, says Brian Greenberg, founder and president of Insurist, an insurance comparison platform. Most likely it is already included in your


homeowners insurance

but can be purchased as stand-alone coverage if required.

Although homeowners insurance is not legally mandated, most


mortgage lenders

requires you to have it. In any case, having coverage is always a good idea to protect what is probably your biggest investment from fire.

How does fire insurance work?

“Fire insurance covers a variety of risks and perils, including those associated with fire, smoke, water damage, and other types of damage,” says Greenberg. As long as a peril listed on your policy caused the fire, your homeowners insurance will cover the damage.

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Here are some of the perils that standard homeowners insurance will cover:

Fire insurance coverage amounts

If a fire damages your home, your insurance provider will pay the replacement cost value or the actual cost value to replace or repair your property.

Replacement cost coverage pays the amount it would take to rebuild or replace your home or personal property based on current cost standards. Unlike actual cost coverage, it doesn’t consider depreciation factors like the age of your home. For example, if your kitchen is destroyed by fire, with replacement cost coverage, your insurer would pay to replace the contents of your kitchen and rebuild the destroyed portion of your home with materials of similar value.

Guaranteed replacement cost coverage covers the full cost of repairs, regardless of amount. This coverage is generally available for an additional charge and can be beneficial in times of rapidly rising inflation.

What does fire insurance cover?

Fire insurance is included in most homeowners insurance policies. A standard HO-3 policy offers coverage for homeowners, personal property, liability, and loss of use.

  • living place: Homeowners coverage is the part of a homeowners insurance policy that covers the cost of repairing or rebuilding your home. Home coverage also includes protection for built-in appliances and home systems.
  • Personal property: Personal property covers you if a fire damages your belongings. Please note that items such as specialty jewelry, fine art, and high-end electronics may require additional coverage.
  • Responsibility: If someone is injured in a fire in your home, your liability coverage will pay for legal or medical expenses related to the incident.
  • Loss of use: If your home is uninhabitable due to fire, insurance will pay additional costs above and beyond your out-of-pocket expenses if you move temporarily.
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While fire coverage is comprehensive, there are some exclusions.

What does fire insurance not cover?

Fire insurance does not cover arson if you set a fire on purpose. It will also not cover fires caused by war, nuclear radiation, or pollution.

If a fire is caused by a flood, earthquake or any other peril excluded on your policy, you will need separate coverage to recover the loss. Also, if you or members of your family are injured in a fire, homeowners insurance won’t cover your medical expenses, says Greenberg.

Fire damage may be excluded from your coverage if you have a second home, especially if it is normally unoccupied. A vacant or unoccupied home presents a higher risk of fire damage since no one is home to mitigate the threat when it occurs. You may need vacant dwelling coverage and dwelling fire coverage to protect your vacant or unoccupied dwelling from fire damage.

If you file a fire insurance claim, be aware that your insurance premiums may increase at renewal. According to insurance.com, premiums usually rise by 29% after the first loss. After the second claim, your premium is subject to an increase of up to 60%.

Do you need additional fire insurance?

If you have homeowners insurance, you generally won’t need to purchase a separate policy for fire protection.

If you live in an area more susceptible to fire damage, hippo insurance suggests that you consider buying more coverage in these scenarios:

  • If you have an old house: If your home is damaged by fire, building ordinance coverage will rebuild your home to meet new building codes.
  • If your home is significantly renovated: Consider expanding replacement cost coverage if your home has unusual or custom features. This coverage will replace your damaged items with others of similar value.
  • High value belongings: If you have expensive jewelry or electronics, consider purchasing a special property float for additional personal property coverage.
  • Concerned about additional living expenses: Consider purchasing more loss of use coverage if you are concerned about temporary living expenses if you have to move due to fire.
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Home Fire Coverage is a separate fire insurance policy for additional coverage. You may need home fire coverage to supplement your primary insurance policy if you have secondary properties, such as a vacation home. Check with your insurance provider to see if they offer a homeowners fire policy for your home.