Everything You Need to Know About Fire Insurance

Are you a homeowner? Have you insured your property against a fire?a house on fire

If you have insurance coverage for your home, it is important that you if it also covers fire damage. If not, then you need to consider getting a fire insurance cover for your home.

In 2017 there were 357,000 house fires. This is according to research carried out by the National Fire Protection Association (NFPA). Home fires lead to loss of property and fire victims will find it hard to recover from such incidences if there is no sufficient fire insurance coverage.

What is Fire Insurance?

Having home fire insurance means having extra protection on top of your normal homeowner’s insurance, that can help pay for damages to your home and any other loses that you suffer in the event of a fire.

This insurance will come in a handy to meet the cost of reconstructing your home and replacing the property in it if your house burns down and you lose all or some of your belongings.

What it Does & Does Not Cover

Fire insurance covers all accidental fires in your home. This means it will cover any fire caused by a short circuit, nuclear damage, flood, war, terrorism and any other perils. However, insurance does not cover any fires caused because of negligence or arson.

Many who commit arson are also committing insurance fraud, which can land you on the wrong side of the law, especially if you file a claim and the insurance company proves it.

Besides the repairs and replacements, the insurance can also cover you under a loss of use policy if your home is not habitable. For example, if you have to stay in a hotel, rental apartment, eat from restaurants, and maybe pay for your laundry, all these expenses are covered too. Be sure to keep the receipts though.

Fire policies also include coverage for water and smoke damages for maybe up to a year. This will depend on your insurance company. Ask us if your policy includes this.

Points to Note in a Fire Insurance Policy

For fire insurance coverage, here is what you should know:

  • Protection: this insurance covers complete coverage and offers protection to all movable and immovable property in your home.
  • Types of coverage: it covers various property including stock, machines, buildings, furniture, fixtures and more.
  • Perils covered: apart from fire, it can also cover losses incurred from other accidents like lightning, expositions, landslides, burst water tank, and so on.
  • Customization: it is possible to customize your fire insurance policy to include any other perils that the insurance does not cover like acts of terrorism.
  • Tenure of policy: house fire insurance is mostly issued for longer periods and can go up to a minimum of three years.

Once you have insured your home against fire, take a video of your home and all that you have in it. This video will come in handy when you need to file for a claim or settle a dispute with your insurer. With such a piece of evidence, no insurance company can avoid compensating you rightfully.

Another smart thing you should do is to keep, the video recording and all receipts either in a fire-safe deposit box, or backed up electronically. This will ensure that you do not lose the important evidence that can help you when filing for compensation.

Understanding Actual Value vs. Replacement Cost

Insurance companies pay claims based on the actual cash value (ACV) of the property rather than the cost of replacement. They give the value after deducting the depreciation from the replacement cost.

Actual Cash Value (ACV)

ACV is the depreciated value of any item insured at the time of loss. With this settlement, you cannot replace what you have lost, but can receive compensation for the value of the item as if it is being sold at a yard sale.

This means you can’t go out and buy a similar item or even a new one unless you go back into your pocket again. With the actual cash value, you will be at a loss.

Replacement Cost

This will give you money equal to exactly what you need to replace the lost item or the damaged property. With replacement cost, you will not need to use any of your money to get back on your feet. It will provide you with all the money you need to replace your items.

In a nutshell, when considering getting fire insurance, insure your home based on replacement cost rather than actual cash value. This way, you will have enough compensation to rebuild your home and replace the items in it.

Note that, insurance policies also put dollar limitation on your coverage. If the limit is $100,000, then they will not offer any compensation beyond the said amount. However, you can always sign up for additional coverage for valuable items like jewelry, pieces of art, and fur.

Fire Insurance is a Good Idea if…

  • You live in an area where house fires are very common
  • The value of the property you want to insure is more than what the insurance policy covers

Do not forget that fire insurance is NOT provided by default.

You have to sign up for a home fire coverage and any other additional coverage that you need for you to claim it. Insurance companies often change their policies and you need to review it annually to make sure it covers you.

Consider Fire Insurance as a Safety Net Against Home Fires

Home fires lead to a lot of loss and fire insurance is one way that can guarantee you compensation in case you lose your home and property to fire. This is a safety net that every homeowner should have.

If you are looking for homeowner’s insurance, fire insurance or any other insurance coverage for your property, we have the right policy for you. Give us a call at: 609-399-0060.