How Fire Insurance Works With Homeowners & Renters Insurance

Homeowners insurance protects a home and personal possessions. Fire insurance is a type of homeowners insurance that protects against losses from a fire. To help you better understand fire insurance, let’s take a look at what it covers and how it works.

What is fire insurance?

Fire insurance is a type of homeowners insurance. It protects against damage resulting from a fire. It covers a policyholder’s dwelling. It also covers outbuildings on the property and losses to personal possessions.
Standard types of homeowners insurance policies often include fire insurance. For most people, this is good enough. But some homeowners need to buy standalone fire insurance coverage. That could be necessary if an insurer excludes protection from wildfires.

Is fire insurance covered by homeowners insurance?

Does homeowners insurance cover fire? Generally, the answer is yes.
Some homeowners insurance policies, called named peril policies, protect against only specific hazards. Fire is almost always a named peril. All-risk policies are an alternative. They protect against hazards unless they’re excluded. All-risk policies also cover fire damage.
Also, fire insurance coverage enables smoke damage insurance claims. So, property and personal possessions are covered whether burning or smoke caused the damage.
Fire damage is typically covered even when the underlying cause of the fire is excluded. For example, if a homeowner doesn’t have earthquake coverage but an earthquake causes a fire, home insurance would still cover the fire damage.

What does fire insurance cover in a homeowners policy?

A homeowners insurance policy protects against any losses resulting from fire. This can include:

The dwelling: Fire insurance coverage pays to repair or rebuild a property damaged by fire. For a homeowner with replacement cost coverage, the policy pays to rebuild the home to the same standard and quality. If a homeowner has market value coverage, fire insurance will only pay what the home was worth before being damaged or destroyed by fire.
Outbuildings: Fire insurance covers sheds, garages, and other structures. A home insurance policy offering fire insurance coverage pays to repair or replace these other structures.
Loss of use: If homeowners cannot use their property due to a fire, fire insurance pays any additional living expenses that result. For example, this could include take-out food if a homeowner’s kitchen must be rebuilt after a kitchen fire. Or it could include rent or a hotel if the entire home is destroyed.
Personal property: Fire insurance pays to repair or replace personal possessions lost in a fire. This includes everything from clothing to electronics to furniture. With market value coverage, fire insurance coverage pays for the depreciated value of the property. With replacement value coverage, fire insurance pays to replace destroyed possessions.
Liability coverage: This pays out if someone else is injured or their property is destroyed by the fire. For example, this coverage applies if a fire spreads to a neighbor’s property.

What is not covered by fire insurance in a homeowners policy?

Fire insurance typically excludes fires that are intentionally set. Many policies also exclude fires resulting from an act of war.
In certain areas, the risk of a fire is very high. So there may be a different answer to the question, “Does homeowners insurance cover wildfires?” In high-risk areas, such as in many parts of California, insurers expressly preclude protection against wildfire damage.
Homeowners should read their policies to determine the extent of fire insurance coverage. If a policy excludes fire insurance, the property owner should buy separate coverage. This is especially important when looking for fire insurance coverage in California where wildfire exclusions are prevalent.
For any homeowner asking, “How much insurance do I need?” it’s important to have an insurance policy that covers the property, outbuildings, personal possessions, and additional living expenses in case of damage to or destruction of the building.

Is fire insurance covered by renters insurance?

Does renters insurance cover fire? This is a common question asked by people who don’t own their homes.
The good news is, renters insurance includes fire insurance coverage. Most policies provide protection for personal property that’s damaged or destroyed by fire. However, some renter's policies may exclude fire insurance coverage in high-risk areas. For example, it may be necessary to buy separate wildfire insurance policies in California.

Should I purchase a separate fire insurance policy?

It often makes sense to purchase a separate fire insurance policy if standard insurance policies exclude fire insurance. This can happen to property owners in high-risk areas.
In some cases, homeowners prefer a standalone fire insurance policy rather than full coverage home insurance. A fire policy can be less expensive than named peril or all-risk insurance. However, it would protect homeowners only from fire damage and not other types of damage.

This can come in handy if it is difficult or expensive to buy standard insurance. For example, property owners looking for insurance for vacant houses may have trouble getting all-risk or named peril coverage.

High-risk fire insurance

High-risk fire insurance can provide coverage to people in areas where standard homeowners policies exclude fires. This could happen in wildfire areas. It could also occur in other situations where there is a high risk of fire. Examples include when a home is located very far from a fire hydrant or fire station.

Fire insurance in California

Some insurance companies include fire insurance coverage in California. However, many insurers exclude coverage for wildfires in high-risk areas.
California residents need to read their policies carefully to understand if they have coverage. And they should shop around for affordable standalone fire protection if coverage is excluded in a standard homeowners policy.

What to do if you can’t get fire insurance

In some cases, homeowners cannot purchase fire insurance coverage from a private insurer. This can happen when the risk of fire is too great. The FAIR Plan is available in those circumstances. This is a state-mandated insurance plan offering coverage for properties traditional insurers won’t protect.
FAIR coverage can be more restrictive in terms of coverage. This is typically a last resort option when other coverage is not available.

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