Fire insurance: How to protect your home from fire damage

A typical homeowners insurance policy includes coverage for fire and smoke damage, but some insurers may exclude this coverage if your risk is higher. In that case, you’ll need separate fire insurance.

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Pat HowardPat HowardManaging Editor & Licensed Home Insurance ExpertPat 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 McGinleyKara McGinleySenior Editor & Licensed Home Insurance ExpertKara McGinley is a former senior editor and licensed home insurance expert at Policygenius, where she specialized in homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Forbes Advisor, Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.
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Fabio Faschi, PLCS, SBCS, CLCSFabio Faschi, PLCS, SBCS, CLCSLicensed Property & Casualty Insurance ExpertFabio 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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Most homeowners insurance policies can help pay to replace your home and personal belongings after a fire, as fire and smoke damage are two commonly covered perils in a standard policy. 

But if your house is at higher risk of fire damage, such as a wildfire-prone area or if your home is older and at risk of electrical fires, your insurance policy may exclude fire coverage from your policy. To fill in this coverage gap, you may need to purchase fire insurance to adequately protect your home from fire and smoke damage.

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Does homeowners insurance cover fire and smoke damage?

Fire insurance is included in every type of homeowners insurance coverage. This means whether you purchase the most basic policy type, like an HO-2, or a more comprehensive policy, like an HO-5, your home and belongings are covered from fire damage as long as it wasn’t started intentionally. If a flood or earthquake causes your house to catch fire, that would be covered as well, even though flooding and earth movement are technically excluded from coverage.

Not all causes of fire damage are covered

Homeowners insurance does not cover intentional damage, so if you or a family member intentionally burn your house down, you won’t be reimbursed for the damage. A standard policy also won’t cover fire damage caused by nuclear hazards, poor maintenance, or regular wear and tear.

Here’s the different ways your homeowners insurance protects you financially if your home is damaged by a fire:

  • Dwelling coverage: If your home is damaged or destroyed in a fire, this covers the cost to repair or rebuild it, as well as debris removal costs. Your insurer will reimburse you up to the dwelling coverage limits in your policy, so make sure you have enough to cover the home’s full replacement cost

  • Other structures coverage: This covers separate structures on your property, such as a detached garage or shed, if they’re damaged by fire. This coverage typically pays out up to 10% of your dwelling coverage limit.

  • Personal property coverage: This covers your belongings, such as furniture, electronic equipment, and clothing, if they’re damaged by fire or smoke. A standard policy covers your belongings on an actual cash value basis at up to 50% of your policy’s dwelling coverage limit, but you can often increase your limits or purchase more robust coverage for an additional cost.

  • 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.

If your house is damaged in a fire, you’ll need to file a claim to get reimbursed for repair or rebuild costs. If your claim is approved, your insurer will reimburse you for the fire damage up to your policy’s coverage limits, minus your deductible.

Learn more >> Does homeowners insurance cover wildfire damage?

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 rebuild cost exceeds your policy limits.

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What is fire insurance & when do you need it?

While fire insurance is technically part of every standard home insurance policy, many insurers won’t cover fire or smoke damage in fire-prone areas with the risk of loss is higher, such as wildfire-prone areas of California and Washington. In this case, you may need to purchase 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 expensive.  

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

Policy cancellations and nonrenewals are becoming increasingly common in California, Oregon, and other states with a high number of residential properties in the wildland-urban interface. In these areas, finding a standard home insurance policy has unfortunately become the exception, not the norm.

Learn more >> House fire statistics for 2022

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 our home insurance rate increase analysis. 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 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:

  • Theft

  • Vandalism

  • Water damage

  • Liability coverage

  • Medical payments coverage

  • Weight of ice or snow

  • Freezing pipes

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

Learn more >> The best home insurance companies in California

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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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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

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  1. Insurance Information Institute

    . "

    Facts + Statistics: Homeowners and renters insurance

    ." Accessed April 30, 2022.

Authors

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

Expert reviewer

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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