Guide to House Fires & Home Insurance

If you've ever knocked a candle over or left food in the oven for too long, you know how frightening the threat of a house fire can be—and how quickly it can start. While most homeowner policies include fire insurance coverage, it frequently includes exclusions that may not provide you with the protection your home and family require.

Fortunately, we've got you covered with all the necessary information. Continue reading to learn about your homeowners policy and your options for protecting your largest investment—your home. Let’s get started!

What Is Fire Insurance?

Fire insurance is a type of property insurance that pays for damages and other losses caused by a fire. It will pay for the costs of repairing or replacing damaged property in your home. Any detached structures on your property, such as sheds, fences, or detached garages, are frequently covered. Some policies will also cover landscaping costs, such as tree and shrub damage.

Fire insurance also covers your living expenses if you have to relocate because your home is temporarily unsafe to live in. This includes your personal belongings as well as lodging and meal expenses in excess of your normal living expenses, up to the policy limits.

Does My Homeowners Insurance Policy Cover Fire Damage?

The good news is that most homeowners insurance policies already include coverage for fire damage to your home, other structures on your property, and personal belongings. If you live in a "high-risk area"—close to canyons, far from fire stations, or in an area where wildfires are common—you may need to purchase a separate fire insurance policy.

You may also choose to purchase additional fire insurance to cover your home and belongings. For example, if your home is old or heavily customized, or if you have valuable possessions, additional fire coverage will help pay for damages that exceed the limit set by your homeowners policy.

What Will My Homeowners Policy Cover in the Event of a Fire?

A homeowners policy covers more than just your house. The following are the components of your policy and what they will cover in the event of a fire:

  • Dwelling coverage: This type of 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: Do you have any other structures on your property, such as a detached shed, garage, or fence? This section of your policy covers anything that could be damaged by fire.
  • Personal property coverage: If any of your clothing, technology, furniture or other belongings are damaged in a fire, your personal property coverage will reimburse you. 
  • Additional living expense coverage: This coverage covers the costs you may incur if you are unable to live in your home for an extended period of time (for example, staying at a hotel or eating out).

What Does Fire Insurance Not Cover?

Your homeowners policy will cover fire damage to your home up to the policy limits. It will, however, only cover accidental fires, whether caused by human error, electrical fire, or natural disaster. Fire coverage will also not pay if your car is destroyed or damaged as a result of a fire in your home. In this case, your auto insurance will cover any damage to your vehicle.

How to Make an Insurance Claim After a Home Fire

After a fire, you must file a claim with your insurer to ensure that all damages are covered.

Take pictures of all the damage to your home and document any belongings you may have lost.

The company will dispatch a claims adjuster to your home to assess the damage and determine the cause and origin of the fire. Take the claims adjuster on a tour of your property to ensure they see everything. When you receive an estimate from your insurance company, compare it to the terms of your policy to ensure that it matches what you've already paid.

How Much Will a Claim for Fire Damage Cover?

The majority of homeowners insurance policies cover fire damage regardless of whether the fire started inside or outside the home, though the amount of coverage varies depending on the cause of the fire. The policy will reimburse you for the damages on either a replacement-cost or an actual cash value (ACV) basis.

ACV coverage may be insufficient to replace items lost at today's market value. However, some policies may allow you to include a replacement cost clause. You will be able to have your items replaced with new ones of the same quality in exchange for a higher premium. If you need to rebuild your home, ACV versus replacement cost is an important consideration, as the cost of rebuilding may be much higher than the home's actual cash value.

If your home was damaged to the point of total loss, your insurer may reimburse you for the home's current market value. The total payout will typically be capped based on the overall value of your home. For example, if your policy covers your home for $350,000, the contents will usually cover at least 50% to 70% of the policy value, or $175,000 to $245,000.

Remember that your home insurance will cover the cost of the damages up to the limits, less the deductible you pay out of pocket. If the damages exceed your policy limits and you do not have a separate fire insurance policy, you will be responsible for covering the excess.