Solved! Does Homeowners Insurance Cover Fire Damage?

Q: I’ve read there are certain things that homeowners insurance doesn’t cover, and I’m a little concerned that I’ll be caught unawares if something like a house fire were to occur. Does homeowners insurance cover fire damage? And if so, are there any exclusions? 

A: In response to the question of “Does homeowners insurance cover fire damage?” the answer is generally yes. The best homeowners insurance will usually cover the structure of the home itself in case of fire damage, as well as the homeowner’s possessions. Even if the home only sustains smoke damage, homeowners insurance will generally cover repair or replacement as needed. Further, homeowners insurance can also provide coverage for wildfires. Read on to learn more about how homeowners insurance provides coverage in the event of a fire.

Homeowners insurance typically covers the home’s structure and its contents in the event of an accidental fire.

There are two parts of a homeowners insurance policy that provide coverage for fires that start accidentally. Dwelling coverage pays for repairs to the actual structure of the home if a fire causes damage. For instance, if a fire starts in the kitchen, dwelling coverage will help pay for repairs or replacement to the walls, ceiling, floor, or any structures in the home itself that sustain damage once the homeowner has paid their deductible.

Homeowners insurance can also provide coverage for the homeowner’s belongings through personal property coverage. This part of a policy covers any personal belongings a homeowner has that are damaged by the fire. For instance, if a fire burns down a home, personal property coverage would pay for items like damaged furniture, clothing, and other personal property (up to the policy limits for some items), less the homeowner’s deductible. Depending on the type of coverage the homeowner selected, the policy would cover either actual cash value (the cost to replace damaged items minus depreciation) or replacement cost (the cost to replace the item in today’s market).

Standard homeowners policies usually insure against both fire and smoke damage up to the coverage limits.

A homeowners insurance policy is designed to cover the policyholder’s home and personal possessions from fire and smoke damage up to the policy’s coverage limits. The homeowner will need to make sure that their coverage limits are enough to fully replace the home if it needs to be rebuilt after extreme damage from fire and smoke. Homeowners can choose actual cash value or replacement cost coverage for the structure of their home; actual cash value coverage will likely have lower premiums, but the homeowner may find themselves forced to pay out of pocket to rebuild the home to its previous standards if the rebuild price is higher than their policy’s coverage limit.

When it comes to personal property, the coverage limit is typically a percentage of the dwelling coverage limit. For example, if the dwelling is insured for $300,000 with a 50 percent coverage limit on personal property, that means the policyholder would have a $150,000 limit on their belongings. Bear in mind that the homeowner will be responsible for paying a deductible, which the insurance company will deduct from the payout.

Dwelling coverage can help pay for repairs—or even a full rebuild—if a home is damaged by fire. 

Dwelling coverage helps cover the cost to rebuild or repair a structure after a fire. For instance, if a fire breaks out in the kitchen but only damages a part of a wall, a cabinet, and part of a floor, the dwelling coverage will pay to repair these structures, even if they were not destroyed.

Although no one wants to think about the possibility of a home needing to be completely rebuilt after a devastating fire, a homeowners insurance policy can cover much of the cost to rebuild a home, if warranted. Homeowners insurance will issue a lump sum payment up to the policy limits to rebuild the house, less the deductible amount.

The policy’s personal property coverage may cover replacement costs for damaged or destroyed belongings.

As mentioned above, homeowners insurance personal property coverage can also help pay to replace belongings in the home that are damaged by a fire. These can include furniture, clothing, and other personal property.

However, it’s important to note that many policies might require the homeowner to obtain additional coverage for certain types of items. Personal property coverage is designed to cover standard items like sofas or clothing and places a cap on certain items such as jewelry, art or collections, sports equipment, and electronics. These types of items may need added coverage in the form of endorsements or riders in order to be fully covered by homeowners insurance.

Like dwelling coverage, personal property coverage also has a coverage limit, which is generally a percentage of the dwelling coverage limit. Once the policyholder has paid their deductible, insurance will help cover the repair or replacement of personal property up to the coverage limits.

Detached garages and other structures on the property may be insured against fires as well—but often at a lesser value.

In addition to dwelling and personal property coverage, a homeowners insurance policy can also provide coverage to other structures on the property if they sustain damage from a fire or smoke. “Other structures” coverage protects sheds, fences, or detached garages. As with  dwelling coverage, homeowners may be reimbursed for replacing or repairing these structures after their deductible has been paid.

It’s important for homeowners to review their policy to see how much “other structures” coverage they have. This coverage is typically a percentage of the total insured value of the home, similar to personal property coverage limits. Homeowners should talk to an insurance agent to make sure they are getting the right amount of coverage for their home, personal property, and detached structures.

Homeowners insurance policies can also include loss of use coverage to help pay living expenses while a fire-ravaged home is being repaired.

In addition to dwelling, personal property, and “other structures” coverage, homeowners insurance provides coverage for loss of use after a fire. This coverage helps pay for any additional living expenses that the homeowner incurs while their home is being repaired or rebuilt.

For instance, if the homeowner had to stay in a hotel while their home was being repaired or rebuilt, they would likely get coverage for the hotel fees that went above and beyond the monthly mortgage payment. The policy might also pay for other added expenses like restaurant food, parking or travel expenses, or laundry expenses during the rebuild.

In addition, your policy may provide liability protection if a fire spreads from your home to a neighbor’s property.

Homeowners insurance also offers liability coverage. This coverage kicks in if the policyholder accidentally causes injury to someone outside their family or property damage to someone else’s property, and they are held legally liable for the injury or damage.

Liability coverage can apply in the event a fire started in the insured’s home and then spread to nearby properties or homes. In this case, the person whose home the fire originated from would use their liability coverage to help pay for damages others sustained in the fire.

Accidental fires, such as grease or electrical fires, are usually covered under homeowners insurance.

In order for homeowners insurance to cover fire damage, the fire must have started accidentally.

This can include a wide array of fires, such as grease or electrical fires. Fires that start from accidentally leaving a candle unattended or from wall scent diffusers causing fires are also likely covered, since they are accidental. Other types of accidental fires that are usually covered include those caused by knocking over a candle or accidentally starting a kitchen fire while cooking.

However, homeowners policies will not cover fires that are set deliberately or result from an act of war.

What does homeowners insurance not cover? Homeowners insurance does not cover fire if that fire was started intentionally. Whenever there is a fire, it’s not uncommon for the fire department to investigate. They’ll look for where the fire started and what fuel was used, and this can help them determine whether a fire was arson or accidental.

It’s common for homeowners insurance policies to exclude acts of war as covered perils; if a home burns down as the result of war, homeowners insurance will typically not cover it.

While wildfires are often covered by homeowners insurance, providers may be hesitant to insure properties located in at-risk areas.

One gray area when it comes to homeowners insurance fire coverage is wildfires. Many homeowners insurance policies do cover wildfires, according to the Insurance Information Institute (III). It’s important for homeowners to make sure they have enough coverage to replace the structure of their home and their belongings. This is because wildfires can be so destructive and difficult to manage that they may wipe out everything in their path.

Which area is not protected by most homeowners insurance? Some insurance providers may be hesitant to insure properties in at-risk locations, such as areas that are prone to drought and resulting wildfires. Homeowners in these areas may need to shop around for additional home fire insurance coverage to ensure that they are fully protected if the worst were to happen.

Your policy’s coverage limits will determine how much your property and possessions are insured for in the event of a fire.

It’s important for homeowners to closely assess what their coverage limits are. Homeowners will need to make sure that their coverage limits adequately cover their home and personal property in case of a major destructive event like a fire. Coverage limits should ideally be high enough to cover the cost of repairing or rebuilding the home.

It’s also a good idea for homeowners to take an inventory of all their possessions to ensure their personal property coverage is adequate. In the event of a fire or other catastrophic event, homeowners will want to know that they have sufficient coverage for their household goods in addition to such items as jewelry, collectibles, sports equipment, electronics, or fine art.

If you need more protection against fire or smoke damage, consider adjusting the terms of your homeowners insurance policy or switching providers.

After reviewing their insurance coverage, homeowners might determine they need more coverage than they have currently. In that case, they have a few options. First, they might be able to add endorsements or riders to their policy to increase coverage for valuable items. Second, they might consider changing the type of policy they have. Different types of insurance policies can cover a broader range of perils or come with higher coverage limits. It might pay for homeowners to talk with their current insurance provider to learn about the available options for fire insurance for houses.

Another option is to look into comparing homeowners insurance companies. If another homeowners insurance company offers more extensive coverage, and especially if the premiums are lower, a homeowner might switch to a different provider for fire insurance for homes.