Fire Insurance: Learn How To Protect Your Home

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If you’ve ever left a chicken breast in the oven just a little too long or forgotten about some fried potatoes on the stovetop, you’re familiar with how scary home fires can be. The National Fire Protection Association estimates that, between 2013 and 2017, about half of all home fires were caused by cooking. 

Whether it’s an accident in the kitchen, an electrical fire or an unattended candle, fires can happen, and you should make sure your home’s adequately protected. Luckily, you can rest assured knowing that typical homeowners insurance policies already cover most fire damage. However, if you live in certain fire-prone areas — for example, areas with lots of wildfires — you might need to purchase a separate policy. 

Key takeaways:

  • Rest assured: most homeowners insurance policies cover fire damage (to your home, other structures on your property and personal belongings).
  • However, some homeowners purchase separate fire insurance policies for extended coverage of their homes and belongings, for example if their homes are old or highly customized or if they have expensive belongings.
  • If you live in high-risk areas (close to canyons, far from fire stations or where wildfires are common) you might need to purchase a separate fire insurance policy.

What is fire insurance?

Fire insurance covers damages to your home, other structures on your property and your personal belongings caused by fire. It also can pay for hotel and food costs if you can’t live in your home anymore. 

It’s likely that your homeowners insurance policy, like most policies, covers fire damage — at least to a certain extent: 

  • Dwelling coverage: Your policy’s dwelling coverage pays to rebuild or repair your home if it’s destroyed by fire or smoke, up to your policy’s limits. 
  • Other structures coverage: As the name suggests, this component of your policy covers other structures on your property like detached sheds, garages and fences that could be harmed by fire. 
  • Personal property coverage: Your personal property coverage pays to replace clothes, technology, furniture and other belongings should they be damaged or destroyed.
  • Additional living expense coverage: This component covers many of the costs you would face if you can’t live in your home for a little while (for example, the costs of eating out or staying in a hotel).

How does fire insurance work?

Fire insurance typically covers fires from things like faulty wiring, electrical issues, gas explosions and certain natural disasters like lightning strikes. (However, if you live in an area where wildfires are common, there might be some coverage limitations.) 

After a fire happens, be sure to file a claim and take plenty of photos of the damage. You’ll want to find out the cause of the fire; when and where it started and the extent of the damage. You should also take stock of what belongings you might’ve lost.

Fire insurance typically covers fire damage caused by faulty wiring, electrical issues, gas explosions and certain natural disasters like lightning strikes. It doesn’t cover fires caused by war, nuclear contamination, radiation or arson.

What does fire insurance not cover?

Fire insurance doesn’t cover fires caused by war or nuclear radiation or contamination. It also doesn’t cover arson, which is intentionally setting your own home on fire. Additionally, if you’re insuring a vacant home, fire insurance typically won’t cover that home if it was empty for more than 30 days before the start of the fire.

Replacement cost vs. actual cash value 

Let’s say your home’s completely destroyed by a fire. You might be reimbursed for your home’s replacement value or its actual cash value, depending on which option you have chosen in your homeowners insurance policy. 

To help you rebuild your home, cash value coverage would reimburse you for the amount that your items were worth at the time of the fire. Since items become less valuable over time because of wear and tear, you would likely receive less than what you paid for them — and you might not have enough coverage to replace your items. 

On the other hand, replacement cost coverage would reimburse you for the cost of new items of similar quality, even if your original items became less valuable over time. Therefore, replacement cost coverage would give you more protection, but it also means higher premiums. 

Think about what’s right for you: would you prefer lower premiums with less coverage in the event of a fire (actual cash value coverage) or higher premiums over time in exchange for more coverage (replacement cost coverage)? If you choose actual cash value coverage, make sure that you have enough savings to compensate for the lower payout and replace your items.

When you might consider adding more fire coverage

Although typical homeowners insurance policies already cover fires, there are some situations in which you might want to extend your coverage: 

  • Your home is older: If your home is on the older side, you might consider adding building codes coverage (also known as building ordinance or law coverage) to your dwelling coverage. That’s because local building codes can change over time, and you might need to cover significant extra costs of making sure that your old home complies with new building codes after a fire. 
  • Your home is significantly customized: If your home has many customized or rare features that would be difficult to repair or replace after a fire, you might want to explore extended replacement cost coverage. This coverage is useful because, sometimes, after a fire, there’s more demand for building materials and specialized labor, and the cost of rebuilding your home rises beyond your policy’s limits.
  • You have expensive belongings: Most personal property coverage limits range from 50–70% of your dwelling coverage. If you have particularly valuable items like smartphones, bikes or camping equipment that might exceed the limits of your policy, you might want to consider extending your personal property coverage. It’s also important to note that standard policies often place limits on jewelry coverage. You might consider purchasing jewelry insurance to protect these special items. 
  • You are worried about maintaining your standard of living after a fire: Standard homeowners insurance policies usually include coverage for additional living expenses up to 20% of your dwelling coverage. However, you might want to extend your limits if you have a large family or other needs that would increase your cost of living. 

Key takeaways:

  • Extended replacement cost coverage can protect you if construction costs rise after a fire.
  • Building codes coverage can pay the extra costs of complying with new local building codes after a fire.

Hippo insurance experts can help you determine exactly how much homeowners insurance you need and provide you with a quote in as little as 60 seconds. 

Homeowners insurance in fire prone areas

In some areas where fire risk is higher, your homeowners insurance policy might not cover fires, in which case you’d need to purchase a separate policy. This is often the case in areas where wildfires are common, near canyons where winds can contribute to fires or even in areas far from fire departments. 

Fire insurance might not be available or might be more expensive in areas near canyons, far from fire departments or where wildfires are common.

You might look into a Fair Access to Insurance Requirements (FAIR) plan, which can provide fire insurance coverage even if you don’t qualify for private insurance. However, keep in mind that FAIR plans sometimes cost more than other insurance policies with less extensive coverage provided, according to the Insurance Information Institute

Fire insurance coverage for rentals

Like homeowners insurance, landlord insurance typically covers your building, other structures, personal property (like appliances within the unit) and tenant injuries. Meanwhile, tenants’ renters insurance covers their personal belongings and additional living expenses should they have to move. 

Fires present a very real risk to your home. If you find yourself asking, “do I need fire insurance?” keep in mind that there were about 350,000 home structure fires per year in the U.S. between 2013 and 2017, according to the National Fire Protection Association. Even if you don’t anticipate it happening, it’s always best to be prepared. 

Make sure that you have enough coverage should you have to file an insurance claim and remember that practicing fire safety can also save you money! Installing smart home smoke detectors and owning a fire extinguisher can earn you discounted premiums and give you more peace of mind knowing that your home’s protected.