If you have recently suffered a house fire, one of the first things you are going to wonder about is exactly what is and is not covered in fire insurance.
In this article, we are going to take a look at what is typically covered by fire insurance and what is typically not. We are also going to discuss how to best gain a good understanding of your policy so that nothing important is missed.
What a fire insurance policy does cover
When it comes to determining what a fire insurance policy covers there are five main areas to look at:
This covers damage to your house and includes structures attached to the home as well as materials and supplies located on or next to the residence that are being used or have been used to construct, alter or repair the dwelling or other structures.
Other Structures –
This coverage is for structures located on the property but set apart from the house. These can include a detached garage, a storage shed, a fence, a driveway and a patio, for example.
Personal Property –
This coverage is limited to 50 to 75 percent of the dwelling coverage (it can be increased through an endorsement) and it is for property owned by the homeowner and stored in the dwelling, such as cash, securities, silverware, jewelry, antiques, cameras, furniture, furs, stamps and coin collections and more.
Additional Living Expense (ALE) Coverage –
If your policy has ALE, that means you are eligible to be reimbursed for any necessary increase in living expenses that are required for maintaining a comparable standard of living when your dwelling is not fit to live in due to a covered peril, like fire. In other words, ALE coverage could cover the bill for the hotel you are staying in because your home was damaged by fire.
Fair Rental Value –
If you have a rental space in your dwelling that is damaged and not fit to live in, this coverage allows you to receive fair rental value less any expenses that do not continue while it is not fit to live in.
Additional items that may be covered by fire insurance
In addition to the five main areas mentioned above, your fire insurance policy may cover some or all of the following:
- Debris removal
- Fire department service charge
- Loss assessment
- Loss of refrigerated products
- Landscaping, such as trees, shrubs and other plants
- Tree removal (only if it is on your structure)
- Reasonable repairs to protect the property from additional damage
- Property removal when it is to prevent further damage
- And more
How to get more information:
To determine what if any of these items your fire insurance covers closely look at all of the following policy sections:
Declarations Page –
This is a one-page summary document that identifies the property being insured and the policy period. It also lists the amount of the insurance, deductibles, endorsements and the home owners’ names.
Insuring Agreement –
This is a short, simple paragraph that explains that the property is covered by insurance if the premiums are paid and all policy provisions are complied with.
Damaged Items –
This section details items covered by the policy. The key thing to keep in mind here is do NOT dispose of any damaged items until the claims adjuster has reviewed them and OK’d their removal. Getting rid of items before an inspection could result in you NOT being reimbursed for them.
This section sets forth a number of instances where property loss will not be covered under the policy. Examples may include intentional loss, flooding, governmental action or earth movement.
This section describes the property covered and lists any limits or restrictions for certain classes or locations of property. Also, depending on the type of policy you purchased, this section may set forth that your property is covered on a “specified perils” or “all risk” basis. Peril refers to a direct cause of loss, such as a fire, a tornado, lightning, theft, vandalism, a wildfire, an explosion and more. Most policies only list what is excluded from coverage, such as flooding and earthquakes.
Here you’ll find definitions for common policy terms, including “you,” “your” and “business.”
OK, now let’s move on to what fire insurance does not cover.
What is not covered by fire insurance
Typical fire insurance coverage exclusions include all of the following:
- Losses due to the insured not properly protecting property after a loss, like a fire
- Water damage from external sources (floods, sewers, underground water)
- Earth movement
- Power failure
- Nuclear hazard
- Damage over time
- Intentional loss
- Defective planning, design, and maintenance issues
- Weather conditions
For more information:
For additional information on exactly what is and is not covered in fire insurance be sure to look at the following in your policy:
Debris Removal –
In the aftermath of a house fire, the contractor will need to remove debris from the scene. Debris removal is necessary before they can start the repairs. The cost of the removal is paid out of a policy’s “Additional Coverages.” It is taken from that section instead of being deducted from the policy limit.
Living Expenses –
When fire damage is so severe that you can no longer reside in your home, your policy will pay the extra costs you incur to live elsewhere if it includes Additional Living Expense (ALE) coverage, we’ll talk more about this later.
This is an older term that may not even be in your current homeowner’s policy but if it is, it can be important. Coinsurance means that the policyholder must carry insurance that is at least 80 percent of a home’s replacement cost. If the coverage does not equal at least 80 percent of the value, the insurance company will pay less than the full amount of the claim.
What to do with a fire-damaged house
Once you have determined what is and is not covered in fire insurance, the next decision you will need to make is whether to sell or repair your fire-damaged house.
If you decide to sell your burned home; we Buy Fire Damaged Houses pays all cash and buys homes in “as is” condition. That means you don’t have to go through a frustrating repair process.
Fill out the short form below to see if your fire-damaged house qualifies for a free, no obligation quote.