Do I need fire insurance in addition to my homeowners policy?

If your home is in a high fire risk area, you may have a difficult time qualifying for homeowners insurance. If that’s the case, you may need fire insurance via your state’s FAIR Plan.

Pat Howard 1600

Pat Howard

Published June 1, 2020


  • A standard homeowners insurance policy covers fire and smoke damage but may not be applicable to those living in high fire risk areas

  • If you live in a high fire risk area, you may need to purchase standalone fire coverage

  • Fire insurance may be available via your state’s FAIR plan, which you can combine with a Difference in Conditions policy

A standard homeowners insurance policy covers your home and personal property against fire and smoke damage. If your home becomes uninhabitable after a fire, your policy may also cover your additional living expenses when you set up shop elsewhere.

But if you live in an area that’s determined to be at high risk of fire damage, you may need to get a separate fire insurance policy. Many insurance companies in wildfire-prone states like California and Washington won’t provide at-risk homes with standard fire protection. If you’re not able to find homeowners insurance without a fire exclusion, you’ll need to find standalone fire insurance to supplement your homeowners policy.


How homeowners insurance covers fire damage

In the event of a house fire, a standard homeowners insurance policy typically pays for debris cleanup, reconstruction of your home and detached structures, replacement of damaged items, and may reimburse you for damaged trees, shrubs, or plants.

Bear in mind that even if you have a replacement cost policy that pays for a home rebuild with a similar build and quality, you’re only reimbursed up to your coverage limit, or the limit of liability in your policy. That goes for your personal property and loss of use coverage components as well.

Dwelling coverage

The dwelling coverage in your policy covers the structure of your home, attached garages or decks, and built-in features and appliances like your flooring, cabinetry, airconditioning units and water heaters. Generally speaking, if your home catches fire because of a cooking accident or your Christmas tree or anything unintentional, you’re covered by home insurance. Arson and vandalism are also covered as long as they weren’’t caused by you or anyone living in your home and your home hasn’t been vacant for more than 60 days.

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 25–50% in the event your home’s reconstruction exceeds your policy limit.

Other structures coverage

Your insurance will also pay to rebuild detached structures on your property in the event they’re also damaged in a fire. Covered structures include garages, fences, sheds, and guest houses. Your other structures coverage limit is typically 10% of your dwelling coverage limit.

Personal property coverage

Fire and lightning are listed as a named peril in a standard homeowners insurance policy, meaning appliances, clothes, furniture, and electronics are all covered if your house catches fire. Your personal property coverage limit is typically 50% or 75% of your home’s insured value.

Check your policy to see how you’re reimbursed for the actual cash value or replacement cost of your damaged belongings. Most insurance companies give you the option to add replacement cost coverage for your personal property for a small additional premium. With this coverage, your insurer pays you the value of brand new items rather than their depreciated value.

Loss of use coverage

Should your home be uninhabitable after a fire or another covered disaster, your policy’s loss of use coverage may cover the costs of temporary housing and other additional living expenses while your home is being repaired or rebuilt. Loss of use coverage is typically 20% of your home’s dwelling coverage limit.


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Why you may need standalone fire insurance

Although only about one in 360 insured homes files a homeowners insurance claim related to fire and lightning, these claims are undoubtedly the single most expensive type of claim with an average $79,785 payout from 2014–2018, according to the Insurance Information Institute.

Fire claims are also getting even more costly for insurance companies, accounting for 35% of losses paid out by insurers in 2017, up from 25% in 2016 and 21.6% the year before that. The 2018 claim figures haven’t been released yet, but the proportion of fire losses could be even higher given the fact that 2018’s Camp Fire was the most deadly and destructive in California state history.

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.

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 market. In many cases, that means getting fire insurance through an excess or surplus carrier in your state.

Many states also offer fire insurance via FAIR (Fair Access to Insurance Requirements) Plans. A FAIR Plan is essentially a last resort policy for homes that are uninsurable on the private admitted market. Since FAIR Plans are backed at the state level, states have criteria in place that you must meet in order to qualify for coverage. In many cases, you need to prove that you have been denied by at least three homeowners insurance companies on the open market before you can get a FAIR Plan.

In California, it’s very common for homeowners to get a state FAIR Plan and combine it with a DIC (Difference in Conditions) policy.

What is a Difference in Conditions policy?

If you own a home and you’re unable to find a policy with the full suite of property coverage, you have the option of getting fire insurance and pairing it with a supplemental DIC policy. A DIC policy fills in protection gaps and covers perils not covered by your fire insurance or FAIR Plan, including:

Difference in Conditions policies are sold by a number of mainstream carriers, including AIG, Stillwater, Travelers, and Safeco.

About the author

Insurance Expert

Pat Howard

Insurance Expert

Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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