16
Apr

Fire insurance is property insurance that provides coverage for loss or damage to a structure damaged or destroyed in a fire. Homeowner’s insurance usually covers fire damage but it may be capped at a rate that is less than the cost of the losses accrued, necessitating a separate fire insurance policy. It is crucial to understand your policy coverages prior to sustaining a loss to ensure you have adequate coverage.

When it comes to fire damage, homeowner’s insurance typically helps pay for repairs to your home, unattached structures on your property and your belongings. Here’s a look at how each type of coverage may help:

1. Dwelling Coverage – the structure of a home as well as attached structures, such as a garage. Landscaping may also be included under this category, typically 5% of your dwelling coverage limit.
2. Detached Structures – commonly called “other structures coverage,” such as sheds, detached garages and fences.
3. Personal Property – extends to your personal belongings, such as appliances, furniture, and clothing.
4. Additional Living Expenses – compensation when you are unable to live in your dwelling due to an insured loss. This may include rent, hotel stays, restaurant meals and more.

If a fire results from a dramatic action such as a lightning strike, or a mundane cause such as a pot boiling over on the stove, home insurance will cover it. In Northern California, wildfires are a frequent threat, but homeowner’s insurance usually provides coverage when such fires consume a home. In addition to the dwelling, homeowner’s insurance policies cover fire damage to outbuildings on the property. Policies have deductibles, but these are generally in the $500 to $1,000 range.

While your policy should include the cost of rebuilding your home after a fire, if you have a lot of valuables in your house, such as art, antiques and jewelry, you should purchase a rider to cover these high-priced items because standard homeowner’s insurance policies set limits on what they pay out for personal property losses. It is also crucial that you inventory your belongings, keeping the records in a safe deposit box or storing the photos online so that you can prove you owned these items. Keep receipts for expensive items in the safe deposit box as well.

The most important thing to do is make sure your home fire insurance coverage limits can cover you in the event of a total loss. Here are a few simple tips:

• Get the right home fire insurance package for your needs: You really need to review your home fire insurance coverage closely and press your insurance agent for answers if you don’t understand something or don’t feel the coverage is right for you. 
• Know the value of your home and possessions: Make sure you know how big your home is and how much it is worth, and update this figure every year. You should also keep accurate track of all of your possessions so you can be sure they are protected. You should take some time to video tape your home and the contents inside it to make sure everything is clearly documented and accounted for. Know what your home and contents are worth, and make sure that you get enough home fire insurance coverage.
• Purchase Replacement Cost instead of Actual Cash Value: A replacement cost policy will replace your damaged home in full while ACV policies factor depreciation into account. If your home has depreciated $100,000, you will not get enough money from your insurance company to rebuild your home as it was prior to the disaster.
• Determine if guaranteed replacement cost for your home structure is necessary: This will not only pay for the replacement of your home, but will ensure its replacement even if it surpasses the overall coverage limits. You must insure 100% of the home, but it may be worth it to protect yourself from total loss.
• Make sure your disaster living expenses are accounted for: Your policy should pay for you to stay in a hotel or apartment (for prolong stays) if the fire has left your home uninhabitable. It is not unheard of for homeowners to be displaced from their home for six months to a year. This coverage does have a limit, typically 20% of the overall coverage. This means a house that has a replacement cost value of $250,000 would have additional living expense coverage of $50,000. 

Unfortunately, there are certain types of fire damage that homeowner’s insurance won’t cover. If the investigation points to arson caused by the homeowner, the insurance likely won’t cover the loss. Arson, a criminal offense, is sometimes used by those who want the insurance money for their building. Although homeowners generally realize they there’s no coverage for deliberately set fires, they may not understand that if a property they own is vacant, the insurance company may also refuse to cover the damage. As a general rule, a home qualifies as unoccupied if no one has lived in it for 30 consecutive days. However, vacant home insurance is available as an endorsement to the standard policy, so homeowners can cover vacation homes and other dwellings that are empty for long periods.

The examples and perspective in this article are the opinion of Claim Ally. Claim Ally Does Not practice law nor does it provide legal advice.