Does home insurance cover fire damage?

Most standard home insurance policies cover fire damage, but you might need a separate fire insurance policy if you live in a high-risk area prone to wildfires.

Pat Howard 1600Kara McGinley

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Pat Howard

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

&Kara McGinley

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

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Fabio Faschi, PLCS, SBCS, CLCS

Fabio Faschi, PLCS, SBCS, CLCS

Licensed Property & Casualty Insurance Expert

Fabio Faschi is a licensed property and casualty insurance agent. His expertise on home and auto insurance has been featured on Forbes, Consumer Affairs, Realtor.com, Apartment Therapy, SFGATE, Bankrate, and Lifehacker.

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A standard homeowners insurance policy covers your home and personal property against fire and smoke damage. If you can’t live in your home after a fire, your policy may also cover your additional living expenses while you temporarily live elsewhere. But if you live in an area that’s determined to be at high risk of fire damage, you may need to purchase a separate fire insurance policy

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What is fire insurance and how does it work?

Fire insurance is a form of property insurance that’s included in most standard home insurance policies. It covers the structure of your home, other structures on your property (like detached garages and sheds), and belongings inside of your home from damage caused by fire and smoke. It also pays for additional  living expenses like hotel stays, food, transportation, and pet boarding if you need to live elsewhere while your home is being repaired.

While most home insurance policies include fire coverage, the one exception is if you live in an area at high risk for fire damage — like parts of California and Washington prone to wildfires. In this case, your standard home insurance policy might exclude coverage for fire, which means you’ll have to purchase a separate fire insurance policy.

To get reimbursed for damage to your home or belongings after a fire, you need to file a claim with your home insurance company. This involves filling out the appropriate claims forms, providing documentation of the damage, and having an insurance adjuster come to your home to survey the damage and agree on a settlement amount (minus your deductible). Your deductible is the amount you have to pay when you file a claim before your insurer kicks in to cover the rest. 

How much does fire insurance cost?

A traditional home insurance policy that includes fire insurance coverage costs an average of $1,899 per year or $158 per month, according to our analysis of 2022 home insurance rates from across the country. But if you live in an area at high risk for fire due to wildfires or your community's ISO fire rating, you can expect to pay much more than that. 

California, for example, saw nearly a 10% increase in home insurance costs from May 2021 to May 2022, according to the Policygenius Home Insurance Pricing Report. Because costly wildfires are becoming more common in California, some insurers are not renewing home insurance policies in affected areas.

“There’s inflation that’s taken place, so the cost to rebuild a home costs quite a bit more than it used to,” says Janet Ruiz, Director of Strategic Communications at the Insurance Information Institute. “There’s also a shortage of contractors. And we’re seeing hotter, drier weather — and more wind — which leads to more wildfires. So all these things are coming into play at the same time.”

How homeowners insurance covers fire damage

In the event of a house fire, a standard homeowners insurance policy typically covers debris cleanup, reconstruction of your home and detached structures, replacement of damaged items, living expenses if you need to stay elsewhere while your home is being repaired, and a limited reimbursement for damaged trees, shrubs, and plants. 

Here’s how fire coverage breaks down for different parts of your home insurance policy

  • Dwelling coverage: Pays to rebuild your home, attached structures, and built-in appliances if damaged by fire or smoke. Standard policies pay out your home’s replacement cost value after a covered loss.

  • Other structures coverage: Pays to rebuild detached structures on your property — like garages, fences, sheds, and guest houses — if they’re damaged by fire. Your other structures coverage limit is typically 10% of your dwelling coverage limit.

  • Personal property coverage: Protects your personal belongings from damage caused by named perils in your policy, including fire and lightning damage. Your personal belongings are typically insured at their actual cash value — meaning depreciation is taken into account when deciding your settlement amount. Your personal property coverage defaults to 50% of your dwelling coverage limit, though it’s possible to increase this for an extra fee.

  • Loss of use coverage: Covers the cost of temporary housing and other additional living expenses if you need to live elsewhere while your home is being repaired after a fire. Loss of use coverage is typically 20% of your home’s dwelling coverage limit.

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Consider extended replacement cost coverage

Since fires often result in a total loss, you may want to consider an extended replacement cost endorsement for your peace of mind. Extended replacement cost increases your dwelling coverage limit an additional 25% to 50% in the event your home’s cost of reconstruction exceeds your policy limit.

Why you may need to buy separate fire insurance

Many insurance companies in wildfire-prone states like California and Washington won’t provide at-risk homes with standard fire protection. Most policies cover fire by default, but if it's excluded from coverage or you're not able to get homeowners insurance at all due to your home's wildfire risk, you’ll need to buy a separate fire insurance policy.

Fire-related claims are undoubtedly the single most expensive type of homeowners insurance claim, with payouts averaging $78,838 from 2015 to 2019, according to the Insurance Information Institute. [1] With the increase in wildfires, fire claims are only getting more frequent and more expensive.  

Similar to how we’ve seen insurance companies exclude wind and hurricane damage from policies in high-risk coastal communities, insurers are either no longer insuring homes in high-risk wildfire areas or excluding wildfire damage from standard coverage.

Policy cancellations and nonrenewals are increasingly common in wildfire zones or high brush areas of California where finding coverage with standard insurance companies has become the exception, not the norm.

How to get fire insurance if you live in a high-risk area

If you’re unable to find homeowners insurance that includes fire protection — or any coverage at all — you may be able to get the protection you need on the high-risk insurance market by following these steps:

  1. Apply for coverage on the standard market. Our licensed insurance experts at Policygenius can help you compare policies from multiple insurance companies to see if you qualify for coverage on the open market. If you don’t, they’ll walk you through your options via the high-risk insurance market or your state’s FAIR Plan.

  2. Look into your state’s FAIR Plan. Many states offer fire insurance through their Fair Access to Insurance Requirements (FAIR) Plan, which is a last-resort policy for homes that are uninsurable on the private insurance market. To qualify for a FAIR Plan, most states require you to show proof you’ve been denied coverage by two or three homeowners insurance companies on the open market,

  3. Calculate how high of a deductible you can afford. The higher the deductible you choose, the lower your home insurance rates. Ask your Policygenius agent to help you choose a deductible that fits within your budget. 

  4. Compare your policy options. Aside from cost, you’ll also want to consider each company’s coverage options, claims satisfaction ratings, and customer service to ensure you’ve found the best insurance company for all of your needs.

  5. Sign your policy and pay your first premium. Once you’ve decided on the perfect insurer for you, all that’s left to do is sign your policy and pay your first premium to ensure your home is covered from smoke and fire. If you don’t already have another insurance policy to cover your home against other perils, you’ll want to consider purchasing a difference in conditions policy as well, which we’ll talk about next.

What is a difference in conditions policy?

A difference in conditions (DIC) policy fills in protection gaps and covers perils not covered by your fire insurance policy or FAIR Plan, including:

It’s very common for homeowners in California to get wildfire insurance coverage through the California FAIR Plan and combine it with a difference in conditions policy. Difference in conditions policies are sold by several popular insurance companies, including AIG, Stillwater, Travelers, and Safeco.

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Frequently asked questions

What is the difference between homeowners insurance and fire insurance?

Homeowners insurance covers your home and belongings against several types of hazards — including fire, smoke, theft, vandalism, wind, hail, tornadoes, and more. Meanwhile, fire insurance is a standalone policy that protects your home and belongings solely against fire and smoke damage.

What is covered in a fire insurance policy?

A fire insurance policy typically covers the structure of your home, other structures on your property (like a detached garage or shed), and your personal belongings in the event of fire damage. This includes fires caused by candles, grease, a short circuit or power surge in your electrical system, wildfires, and lightning.

References

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  1. Insurance Information Institute

    . "

    Facts + Statistics: Homeowners and renters insurance

    ." Accessed April 30, 2022.

Authors

Managing Editor & Licensed Home Insurance Expert

Pat Howard

Managing Editor & Licensed Home Insurance Expert

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Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Senior Editor & Licensed Home Insurance Expert

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

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Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

Expert reviewer

Licensed Property & Casualty Insurance Expert

Fabio Faschi, PLCS, SBCS, CLCS

Licensed Property & Casualty Insurance Expert

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Fabio Faschi is a licensed property and casualty insurance agent. His expertise on home and auto insurance has been featured on Forbes, Consumer Affairs, Realtor.com, Apartment Therapy, SFGATE, Bankrate, and Lifehacker.

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