Does Homeowners Insurance Cover Fire Damage?

May 27, 2022

Carlos Reyes

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Does Homeowners Insurance Cover Fire Damage

Homeowners insurance coverage protects you in many unexpected, life-alternating situations, including when your entire house—or part of it—suffers fire damage.

Fire and lightning damage are frequently the most expensive claims homeowners make. They accounted for about 27.5% of all claims made between 2015 and 2019. During that period, the average claim cost was $78,838.

Fires can destroy your home and everything in it. You should have the coverage you need and take every precaution necessary to reduce your risk of ever having to file a claim—or worse—getting your claim denied.

In this post, I will discuss:

What fire insurance is, and how it works
When your homeowners insurance policy covers fire damage (and when it doesn't)
Types of fire damage covered
How to tell if there's a fire in your home
What you should do if your home is on fire
How to prevent fires from happening
How to make a claim for fire damage
What should you do if your fire damages are uninsurable

Let's get started with this post.

What Is Fire Insurance, And How Does It Work?

Your standard homeowners insurance policy will cover fire damage and help pay to repair or replace your home and any contents damaged by a fire. You don't need a separate policy for fire coverage. However, I recommend reading through your homeowners insurance policy carefully to know what's included and what's not.

When Does Your Homeowners Insurance Policy Cover Fire?

Your home insurance policy offers multiple types of coverage and protects you in several situations. Here are the types of coverage included.

Dwelling Coverage

Dwelling coverage can help pay for your home's repair costs, minus your home insurance deductible. Dwelling coverage includes the structure and materials of your home and everything attached to it. Usually, dwelling coverage provides you with the total coverage needed for repairs. However, it may be subject to limitations, so read through your policy carefully and purchase additional coverage if necessary.

Other Structures Coverage

Other structures coverage can protect structures on your property that aren't attached to your home. If your shed, detached garage, or barn caught fire, they're covered by your homeowner's insurance policy.

Typically, other structures coverage can pay for about 10% of your total dwelling coverage. For example, if your dwelling coverage is $250,000, the replacement cost for your other structures coverage is likely $25,000.

Personal Property Coverage

If your personal belongings are destroyed in a fire or suffer smoke damage, your personal property coverage can reimburse you. Typically, your personal property is between 50% and 70% of your dwelling coverage, but it varies based on which insurance company you choose and how much coverage you decide to buy.

Read through your personal property policy thoroughly, because certain items have limits or sub-limits. For example, if you have $5,000 in cash hidden under your mattress for safekeeping, and the mattress gets destroyed, your special items limits may only cover $500 of it. This means that, even if you have $100,000 in personal property coverage, you're only getting $500 for the cash destroyed in the fire.

I recommend taking inventory of your valuables to figure out how much they're worth and how much coverage you'll need. You can purchase additional coverage for special items like cash, jewelry, and collectibles. A documented list of these items also makes filing a claim easier.

Personal Liability Coverage

Sometimes a roaring fire doesn't limit itself to your property. If a fire that started at your house damages your neighbors, you're liable for it. Luckily, personal liability coverage can help cover the costs of damage and legal fees if your neighbor decides to sue.

The amount of personal liability coverage depends on how much you need. Many homeowners insurance companies, such as Traveler's Insurance, provide a minimum of $100,000 in personal liability protection. However, that may not cover all the costs of your neighbor's house burning down. You might want to consider purchasing additional coverage, like personal umbrella insurance, to raise your liability limits if the unthinkable happens.

Loss Of Use Coverage

If your entire home (or a large portion of it) is damaged or destroyed in a fire, you'll have to temporarily stay elsewhere. Loss of use coverage pays for your additional living expenses while your home gets repaired. These additional expenses include, but aren't limited to:

Hotel stays
Short-term rental expenses
Restaurant meals
Laundry bills

Types Of Fire Damage Covered

Now that you know what types of coverage your homeowners insurance includes, here are a few situations it covers:

Accidental fires: Accidents happen. If you accidentally knock over a candle, or if your toaster catches fire and burns your cabinets, your homeowners insurance policy usually covers it.
Candle fires: Speaking of candles, if a pet knocks one over and causes a fire, you're still covered for it.
Electrical fires: If your electrical system experiences a power surge or a short circuit and sparks a fire, your policy typically covers it.
Grease fires: If you're cooking with oil on a gas range and it catches fire, your homeowners insurance should cover the cost of repairs.

When Doesn't Your Homeowners Insurance Policy Cover Fire?

There are two main instances where your home insurance won't cover fire damage:

The fire was set on purpose. If you or someone in your dwelling intentionally sets your home on fire, homeowners insurance won't cover any damage caused. Also, if you try to file a claim after setting your house ablaze, you could be found guilty of insurance fraud.
Your location is prone to wildfires. If you live in an area where forest fires occur regularly, insurance companies take on added risk by covering you. Thus, you might have a hard time getting homeowners insurance.

How To Prevent Fires From Happening

Taking preventative measures minimizes your chances of fire damage while maximizing your chances of getting your claim approved. Some of these tips may seem simple, but they can save your life. In many cases, preventative measures can also result in you getting a discount on your homeowners insurance.

Test Your Smoke Alarms

You should test your smoke detectors once a month and change their batteries as needed, usually once or twice a year. Make sure that all of your smoke detectors are fully functional. There should be a smoke alarm in every bedroom and on every floor of your home, so double-check to ensure you're testing all of them.

Installing smart detectors can also let you know when your batteries need to be changed. Some homeowners insurance companies will offer you a 5% discount when installing smart detectors.

Regularly Check Your Wiring And Appliances

After testing your smoke detectors, do a routine sweep of your appliances. Inspect electrical wiring in your basement, attic, and crawl spaces to ensure your pets or pests haven't been nibbling away at them. Also, inspect your air conditioner and heating units to ensure they're functioning optimally. Check the lint traps in your dryer, and clean any grease buildup accumulating in and around your stove.

Neglecting to maintain upkeep on your wiring and appliances can hinder your chances of getting your fire insurance claim approved.

Incorporate Safe Practices

Fire safety education isn't just for kids. How often do you or someone else in your household leave candles burning in your home, or forget to turn your stove off? Any time you leave your home, do a quick sweep to ensure nothing can start a fire while you're gone.

Protect Your Pets

Keep your pets away from fire hazards, especially if they're untrained. When you leave them alone in the house, keep them crated or gated off from potential dangers in your home. You never know when your new puppy might accidentally knock over a candle and set your dining room table on fire.

Be Mindful Of Flammable Items

You probably have more flammable items in and around your home than you think. While they’re not likely to hinder your claim getting approved, you shouldn’t take any chances. Here are some items you should be aware of and why:

Yard debris. Keep dry leaves, lawn clippings, and other yard debris away from your home. On hotter days, they can generate enough heat to start a fire.
Nail polish and nail polish remover. These items and the vapors they emit contain acetone, which is flammable. If either is too close to an open flame, they could start a fire.
Aerosol cans. We've all seen movies where someone turns an aerosol can into a flamethrower. While it's sometimes more dramatic in Hollywood, aerosol cans are flammable and should be kept away from heat-generating appliances.
Hand sanitizer. Sanitize at a safe distance. Hand sanitizer is at least 60% alcohol, which is flammable.
Flour. Not only is flour highly flammable, it's potentially explosive! Keep it away from any heat-generating sources.
Oranges. Orange juice can cause an open flame to ignite and do some significant damage.
Non-dairy creamer. The artificial flavorings added to non-dairy creamers can use them to ignite if near an open flame.

How To Make A Claim For Fire Damage

Once you and your loved ones are out of your home and a safe distance from the fire, here's what you need to do:

Contact your insurance company. Call your insurance provider to jumpstart the claims process. The faster you do this, the better.
Document everything. If the fire is extinguished and you can do so safely, take pictures and video of the fire damage and any personal belongings that have been destroyed. If you've kept an inventory of your belongings, it will be conducive to assessing your claim.
Secure your home. After dealing with a fire, the last thing you need is to get robbed. If you can, board up the damaged areas of your home to keep thieves out.
Talk with your insurance adjuster. Your insurance company will likely send an insurance adjuster to investigate the damage done to your home and valuables. This is where any documentation you have will come in handy. Also, you should take notes as you and the adjuster walk through your home.
Shop around for estimates. Your insurance company may provide you with a list of contractors that can rebuild or repair your home. Contact several of them to get estimates before making a decision.

What Should You Do If the Damage Is Uninsurable

If your claim is denied, you may have to pay for the damages. Given how costly they may be, I recommend filing an appeal with your insurance company or getting a second opinion from a licensed contractor. You can also contact your state's insurance commissioner for help or guidance. You can also hire an insurance attorney to defend your case if all else fails.

Final Thoughts

Watching your home go up in smoke (literally) can be an incredibly traumatizing experience. Not being properly insured can make things exponentially worse. Make sure you have the proper homeowners insurance coverage you need, and go over your policy with an insurance agent if you have any questions.

Keep reading on SmartRealEstateNerd.com: Want to know what else your home insurance covers? Does your homeinsurance cover plumbing? Find out more so you're protected in the eventuality that something bad does happen.

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