Because fire is a basic named peril, homeowners insurance typically covers damage caused by house fires.
You left a candle burning too long. A storm knocked down an electrical wire and caused a spark. Perhaps a simple cooking mishap resulted in your curtains catching flame. Your home and belongings have now been damaged by a fire. Is it covered by your insurance?
Fire and smoke can have devastating effects on your house and its contents, but fear not: your homeowner’s insurance policy has got you covered.
Yes, all homeowners policies cover damage by fire. Fire is one of the “basic named perils'' (alongside internal explosion and lightning) covered by every form of homeowners coverage. The word peril, in insurance terms, refers to the cause of a loss. There are several forms of homeowners insurance, each with a different list of perils the insurance company will cover. No need to worry: because fire is one of the perils listed at the most basic level, any homeowners policy form will cover damage resulting from a fire.
Homeowners policies cover more than just your building. There are six parts to a homeowners policy, and each part represents a covered element:
The most important thing to remember about insurance coverage is that the cause of loss must be accidental. Insurance will not cover a loss if the cause was intentional.
Believe it or not, house fires are incredibly common and many are caused accidentally by occupants. Be it an unwatched candle, electrical surge or cooking mishap, the majority of house fires begin because of human error. Remember that your insurance policy will pay only up to its limitations, but standard homeowners policies are typically sufficient in covering losses from fire damage.
Where there’s fire, there’s smoke. Smoke can damage property, even if the damaged items didn’t erupt in flames. Smoke can mar walls, ruin furniture, break glass, and compromise electronic devices. If the smoke came from the fire and damaged your belongings, they, too, can be covered under your home insurance.
Since standard homeowners policies cover fire and smoke, your insurance company will cover damages resulting from these perils up to the policy limits. The coverage limits you selected at the inception of your policy are listed in your policy documents. You are responsible for the deductible, the amount of which can also be found in your policy documents. Essentially, your home insurance policy will cover the cost of the damages up to the limits, minus the deductible that the insured pays out of pocket. If the damages exceed the limits of your policy and you do not have excess or other coverage, you will also be responsible for covering the excess.
The table below shows the differences in homeowners insurance premiums before and after fire claims.
|Number of Claims||Average Annual Premium||Monthly Cost||% Difference|
|1 Fire Claim||$1,525||$127||21%|
|2 Fire Claims||$1,590||$132||4%|
|3 Fire Claims||$1,635||$136||3%|
Sorted by some popular insurance companies, the following table shows the average annual homeowners insurance rates after a fire damage claim:
|Insurance Company||Rate After Fire Claim|
Some areas are more prone to wildfires, forest fires or brush fires than others, and some older homes might have outdated electrical wiring that insurance companies see as dangerous. While standard homeowners insurance policies typically prove sufficient coverage for most homes, if your home is located in a particularly fire-prone area, it may prove challenging to find a homeowners policy or you may wish to consider extra fire insurance coverage.
This is where the FAIR Plan comes in. The Fair Access to Insurance Requirements (FAIR) Plan is a state-mandated program that helps cover high-risk properties when standard insurance isn’t available. It is important to note that FAIR plans are particularly bare-bones when it comes to coverage, covering only a few perils rather than the long list that homeowners policies cover. For example, California’s FAIR plan only covers fire, internal explosion and lightning before endorsements, so in this case, it would be in the homeowner’s best interest to still search for a standard homeowners policy to cover other perils like theft and hail damage.
While the FAIR plan is government-mandated, you must meet certain conditions to qualify for coverage. Owning a high-risk home does not automatically qualify you for a policy. You may be asked to limit the risk of fire by making repairs or adjustments to your home. The FAIR plan is generally no cheaper than a homeowners policy from a private insurer, though, so it is not totally necessary to explore this option unless your home is considered high-risk or you have been denied coverage by private insurers.
Most homeowners and dwelling coverages offer sufficient protection in the event your property is damaged from fire. Your home, structures on the property and personal belongings are covered, as well as additional living expenses if you are required to relocate until repairs are completed. Unless your home is located in a high-risk area or the house is very old, your standard homeowners policy is likely all you need to cover fire damage.