Fire insurance isn't something you think about every day. Should you? Below, I'll explain what you should know about this important coverage.
What Is Fire Insurance?
Updated on Sep. 13, 2023
As I follow the news about the wildfires raging across the American West and Canada, and tragic losses during the recent fires on Maui, fire safety and fire insurance have been on my mind. I realized I didn’t know much about fire insurance! Do I need it? How much does is it cost? What’s covered, and what’s not?
To get answers, I contacted Angel Conlin, chief insurance officer at Kin Insurance. She walked me through the fine print of fire insurance, and how it helps homeowners in the event of this destructive, unpredictable force. Here’s what you need to know.
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What Is Fire Insurance
Fire insurance, as the name suggests, is a component of homeowner’s insurance that covers damages caused by fires.
Conlin says most of the time your homeowner’s policy already includes fire, so you don’t usually need to purchase additional coverage. “Lenders have an insurable interest in your property, so they typically want homeowners to get valid home insurance that includes fire coverage,” she says.
But standalone coverage for second homes or wildfire-prone areas is also available and can be required in some instances.
Fire insurance typically pays for damages to your actual home and its contents, including appliances and furniture. Sheds, garages, greenhouses and other detached structures on your property are also covered. Conlin says fire insurance may also pay for living expenses like a hotel stay or restaurant meals if you’re forced to live elsewhere while your home is repaired or rebuilt.
Keep in mind the damages you can recover are subject to the terms and limits of your specific policy.
How Does Fire Insurance Work?
I asked Conlin to walk me through the claims process.
She explained that just like regular insurance, you file a claim with your insurance company if your home is damaged by fire. If the claim is approved, your policy covers the expenses of repair or replacement up to the limits specified.
“Like most insurance policies,” Conlin says, “fire insurance has coverage limits established by the policyholder’s insurance company when written.”
Insurers also limit coverage by adding exclusions to policies. These are damages caused by specific events, locations or “perils,” such as:
- Arson or other intentional acts by the homeowner;
- Hot wildfire zones, meaning places where wildfires can occur at any time of year;
- Homes that are vacant more than 30 days at a time, since vacant homes increase the risk of substantial loss;
- War zones and homes affected by nuclear radiation.
How To Know if You Need Fire Insurance
Though fire insurance is included in most homeowner policies, Conlin says people in some areas may need to purchase extra coverage. Conlin points to California, where wildfires are especially prevalent. In high-risk areas, insurers and banks may require you to purchase additional coverage specifically for wildfires.
What Homes Are Eligible for Fire Insurance?
“Fire insurance is available to the vast majority of homeowners,” Conlin says. The coverage may have limitations or exclusions based on where you live or the type of property. But if you can qualify for homeowner’s insurance, you’ll likely get fire insurance along with it.
Again, exceptions of note include wildfire zones and if your home is vacant for an extended period. If these apply to you, Conlin recommends talking to your insurance company about getting second home insurance (sometimes called dwelling fire insurance) or wildfire coverage.
How Much Does Fire Insurance Cost?
Because fire insurance is generally bundled in with homeowner’s coverage, the cost varies widely based on location, property value and individual coverage needs. Conlin says on average, homeowners can expect to pay a few hundred to more than a thousand dollars every year.
Premiums may be reduced if you have home security monitoring or fire-prevention mechanisms like sprinkler systems. And here’s one that surprised me: Living near a fire station is a bonus. Conlin says homes near a staffed station tend to have lower premiums!
Conlin notes the average cost of a fire damage claim is $77,340. That’s a lot of money, even if it’s only a partial loss. A total loss could set you back hundreds of thousands of dollars to repair or rebuild. So unless you have infinite resources, fire insurance is a good deal and something we all need.
