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Wildfire & Fire Insurance 101: Home Insurance in High Fire Risk Areas

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Fires continue to be one of the most common incidents in the United States. Local fire departments have responded to 1.4 million fire grounds. A further breakdown will reveal that a fire breaks out somewhere in the US every 89 seconds. In other words, an estimated 970 fires occur every 24 hours. 

In connection, the after-effects of fires are often magnanimous. The latest report from NFPA shows that the 28 recorded large-loss fires in 2020 resulted in the loss or destruction of properties worth $8.1 billion. In connection, fire incidents in 2020 contributed to 3,500 deaths and 15,200 injured individuals. 

As a homeowner or businessman in the US, an easy and effective way for you to have protection against fire breakouts is through wildfire and fire insurance.  Through this guide, know what commercial or home fire insurance policy is, how it works, how much premiums cost, and more.



What is Fire Insurance?

Fire insurance is a type of an insurance policy wherein a policyholder (you) agrees to pay a specified amount of premiums to the carrier (insurance company). In exchange for the money received, the carrier is obligated to reimburse losses should the policyholder’s property be damaged or destroyed by a fire. Fire insurance can be classified as commercial or residential.

Note that the term “fire” as used in the language of fire insurance doesn’t pertain to fires used for cooking, burning materials, or any other deliberate means. Fire in the language of the policy pertains to a flame produced NON DELIBERATELY through ignition, combustion, or smoke.

Also for clarity purposes, wildfire insurance is a specialized form of fire insurance. Therefore, it is still fire insurance in the literal sense.


A History of The Policy

In 1666, the City of London burned from September 2nd to September 6th. Coined by historians as the “Great Fire of London, this event burned 13,000 houses, 90 churches, and numerous public buildings. It’s estimated that 100,000 were left homeless and property damage is tallied at £7.5 billion ($8.9 billion)

The Great Fire left many impoverished. Also, the rental system was changed wherein tenants are liable for the damage caused by a fire to their landlord’s property. As a result of this, people became wary of the losses if another equally catastrophic event occurred.

To address the growing concern, the Insurance Office for Houses was established in London in 1681 by Nicholas Barbon just next to the office of the Royal Exchange. The fire insurance policy the Insurance Office for Houses underwrote insured 5,000 homes. Soon after, other pioneering insurance companies were established such as Hand in Hand Fire and Life Insurance Company, The Sun Fire Insurance Office, and Westminster.


Origin of Fire Insurance In The United States

The establishment of fire insurance companies in London led to the emergence of fire insurance companies in the US. This is because the first American carriers copied how British carriers designed their fire insurance policies. In the USA, the first fire insurance company was established by Charleston residents in 1735. This stopped providing services in 1741 and was replaced by Benjamin Franklin’s Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.

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The Principles: How Does Fire Insurance Work?

A home or commercial fire insurance policy is a legal contract between the policyholder and the carrier. It will not apply if none of the parties provide an express consent or agreement to the terms of the policy.  Any fire insurance policy can be void, nullified, or voidable if it doesn’t have the elements of a valid contract namely:

  • Offer

  • Consideration

  • Acceptance

  • Mutuality 


The policyholder (you) needs to have an insurable property to apply for fire insurance. Such insurable property can be your own possession or someone’s possession only entrusted to you through a binding agreement. In line with this, fire insurance isn’t available to persons not owning a property or doesn’t have custody over someone’s property. 

The policyholder, upon agreeing to the terms, must provide a monthly or annual payment to the insurance company underwriting the fire insurance policy. In insurance lingo, this is called a premium. Premiums are calculated based on the value of the covered property, its structure, its location, and how it’s used. 

In exchange for the premiums paid, a fire insurance policy will recoup the losses of the policyholder should his or her property becomes damaged or destroyed because of a fire.  This is done by providing cash equal to the depreciated or non-depreciated value of the covered property. 

The policyholder needs to file a claim in order to use his or her fire insurance policy. This means providing a letter telling that a covered peril has happened and complying with the requirements of the insurance company for the claim to be approved. 


Perils Covered by Fire Insurance

Fire insurance policies underwritten by different carriers vary in features. Nonetheless, expect all to provide coverage for the following perils:


Fire and Wildfire 

Fires or wildfires resulting from ignition, combustion, or smoke are the primary perils covered by a fire insurance policy.  Fires resulting from deliberate actions aren't a covered peril. The same is also true if the covered property was burned by the order of a legal authority. 


Lightning 

Fire insurance also provides coverage if your property burned due to lightning. It's common knowledge that lightning can burn or ignite the object it hits. This is why it’s a covered peril in fire insurance policies.

 


Explosions 

Fire insurance policies cover explosions caused by electronic devices or specific flammable objects. Explosions due to the sudden increase of a covered property’s internal temperature is also covered.  Note that fire insurance doesn’t kick in if an explosion is caused by a boiler, heater, or any other similar devices. 


Aircraft

Fire insurance will recoup losses if your property is destroyed by a plane, helicopter, or any other aerial vehicle. Any damage or loss caused by the falling attachments or loads of an aircraft to your property will be catered too.

 


Riots and Vandalism

Fire insurance policies will take care of the damage or loss of your property due to riots and vandalism. Arson can be covered or not covered depending on the insurance company you decide to work with. 


Extreme Weather

Fire insurance will provide coverage if your property becomes lost or destroyed due to extreme weather. Particularly, what’s covered are typhoons, storms, floods, earthquakes, tempests, cyclones, hurricanes, and tornadoes. 


Impact

Fire insurance covers impact damage. In practice, it will recoup financial losses if a vehicle or any other machine crashes into your property. Because of this, fire insurance is very useful for commercial buildings and houses near public roads 


Missile Testing 

Fire insurance will cover costs if your property is hit by a missile or any other projectile. However, coverage only applies if the missile or projectile found its way to your property due to testing. Fire insurance won’t help if your property was targeted deliberately. 


One Important Thing To Understand

Fire insurance, in its most basic form, will only protect your property against fires, wildfires, and lightning. To cover other perils we mentioned above, you need to add optional coverages or introduce endorsements to your fire insurance policy. 


What Does Fire Insurance Cover?

Here is a comprehensive list of some of the costs covered by a standard fire insurance policy.


Property Destruction

First and foremost, your insurance is designed to cover the loss of your home or other insured buildings. For many people, their most valuable possession is their house.

However, fire insurance will also cover personal items such as furniture, electronics, collectibles, and more. As long as you claim these items on your policy, then they should all be covered when it comes time to collect your payout.

Just keep in mind that as you add new items to your house, you may need to call your insurance provider and provide them with details so that they have a record of the item being in your house.


Smoke Damage

Sometimes a fire may not destroy the entire building and will just be contained to a certain room. However, the smoke damage caused by the fire can spread into the walls and ceilings, compromising the integrity of the structure. Fire insurance coverage typically covers any cleaning and repair expenses due to smoke-related damage.


Personal Injury

If you (the policyholder) are injured while on the insured property, then you'll be eligible for a payout for personal damages and to help pay any medical bills.


Food and Lodging

After losing everything, most people have to rent a hotel or second house. They also may need to pay extra money to eat out. Thankfully, your insurance company should pay for all of these related costs.


What Fire Insurance Doesn't Cover

There are a couple of things that are excluded from the insurance policies.

Your Vehicle

It's not uncommon to lose your car or motorcycle during a house fire if it was in the yard or parked in the garage. However, these are usually not covered. You'll have to seek compensation for your vehicles through your auto insurance policy.


If The Home Was Vacant

If the property was left vacant for over a month, many standard insurance policies will refuse to cover the costs. They'll try to say that the fire was caused by negligence that could have been prevented if the owner would have been there.


Filing a Fire Insurance Claim 

As stated earlier, you have to file a claim to use your fire insurance. Make the first move upon experiencing property damage or loss due to a covered peril. Don’t expect the insurance company to ask if you want to use your fire insurance before it expires.  That said, here are the steps in filing a fire insurance claim.


Report The Incident To The Insurance Company

Immediately inform the insurance company that you experienced a covered peril and tell them that you want to use your fire insurance policy. You can do this by calling or sending an email to the carrier’s claims department. 

If your insurance company only works with agents, then reporting a claim is done by getting in touch with the insurance agent or broker who sold the fire insurance policy to you. 


Get a Claim Form 

Upon knowing that you experienced a covered peril, the insurance company will then send a claim form to you via email, fax, or mail. But if you’re working with an online insurance company, you will have to fill up a claim form on a website. Understand that it might take a few days for the insurance company to review your claim form. And so, expect to do some waiting. 


Send The Requested Papers

Upon reviewing your claim form, the insurance company will get back and request documents to be submitted. These can be pictures, affidavits, or any other documents that will prove you have experienced a loss due to a covered peril. 


Survey and Evaluation

The insurance company might do another round of verification by sending an insurance adjuster to do some survey or evaluation. Expect this to happen if the covered peril resulted in major losses on your part and the amount you need from your fire insurance policy is hefty. 


Claim Settlement 

The final step is claim settlement. This is when the insurance company agrees or disagrees on you wanting to use the funds of your fire insurance policy. Note that you can dispute in a court of law if your claim is denied. You can also report the matter to the insurance department of your state. 


How To Deal With an Insurance Adjuster After a House Fire?

Although your insurance adjuster may seem a bit cold and uncaring, that's their job so don't let it get to you. Here are a few quick tips to help you deal with an insurance adjuster in the event that you suffer a house fire.

  • Take a detailed inventory of all items lost

  • State the nature of your loss clearly

  • Don’t get worked up and stay calm and collected even if experiencing a lot of back and forth with the insurance adjuster

  • Ask for a review of the terms of your fire insurance policy and reference that on your fine print 

  • Keep receipts for every purchase or cost

  • Be patient. You will get your money

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How Much Does Fire Insurance Cost?

The additional premium charges for your fire insurance property coverage vary, depending on your zip code and other factors. The average monthly premium charge is around $120 a month or $1,440 per year. This is closely correlated with the average damage claim amount, which is around $80,000 per claim.

Additionally, here are the rates of the best fire insurance companies. 


Cost per Month Cost per YearBest for
Lemonade$98$1,176Residential fire insurance
Shelter $115$1,380Commercial fire insurance
Progressive$121$1,452Fire insurance with transparent rates


Compare quotes to get a better view of your actual premiums. Click the "Get Quotes" button on this page to start.


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Best Fire Insurance Companies 

Buying a policy is easier and safer if you know the trusted carriers. Read the reviews below to know the pros, cons, and monthly premium rates of the best fire insurance companies. 


Lemonade Fire Insurance

Pros

  • Online quotes

  • Fast to handle claims 

  • Get insured without talking to an agent 

Cons

  • Has poor customer reviews

Lemonade provides residential fire insurance. This is included in the company’s homeowner's insurance policy. Choose Lemonade because it offers online quotes within minutes.  Also, this insurance company efficiently handles claims and never leaves you in the dark about the particulars of your coverage. 

Best for: Residential fire insurance

Average cost: $98 per month 

Our rating: 10/10


Shelter Commercial Fire Insurance

Pros 

  • Work closely with agents

  • You can choose which agent to work with

  • Commercial fire insurance covers a lot of perils 

Cons

  • Only provides coverage in 15 selected states 

Shelter’s fire insurance for commercial property covers 12 perils including those not commonly included by other carriers such as volcanic eruption and sinkhole collapse. You can also introduce an endorsement to your fire insurance policy to be protected against water damage, building collapse, and ice or snow. Shelter’s commercial fire insurance is an actual cash value coverage but you can decide to get a replacement cost coverage for specific perils. 

Best for: Commercial fire insurance

Average cost: $115 per month

Our rating: 9/10


Progressive Fire Insurance

Pros

  • Online quotes

  • Transparent pricing 

  • File a claim online 

Cons

  • Not accredited by BBB

Progressive’s fire insurance is included in its homeowner’s policy. You can obtain a free quote from this company showing what’s covered, the amount of coverage to be received, and the monthly premiums. 

Best for: Fire insurance with transparent rates

Average cost: $121 per month 

Our rating: 8/10


Fire Insurance FAQs

How To Protect Your House From Wildfires? 

Please follow these steps to protect your home or your property from fire:

  • Make sure the 100 to 200 feet surrounding your house are clear of debris and flammable materials or objects to create a 'safe zone'

  • Block any exterior vent and rooftop openings, even your doggy door, with hardware to prevent embers from getting out and putting your whole interior on fire!

  • Fireproof your roof by making sure it is not made out of flammable material (asphalt shingle, metal, tile or slate roof) and if it is - spray it with fire retardant or install fire sprinklers

  • Protect the 5 feet surrounding your house: Make sure there are no propane tanks and firewood stacks which can become a serious threat in case a fire breaks out, maintain your lawn and clean out dead vegetation - any flammable material must be moved away for your own good! 

  • Make sure you have fire extinguishers, alarm systems, and sprinklers in easily accessible places for emergencies

  • Always use fire-resistant material when building or renovating your home


Do I Need Fire Insurance If I Have Renters Insurance?

If you are renting, then your landlord is required to have property insurance. In the event of a fire, your renter's insurance will cover any of your personal losses.


Is Fire Insurance Covered by Home Insurance?

Although many homeowners insurance policies do include a small amount of fire damage coverage, this is usually designed for small accidents, not full-scale disasters.

If you want to make sure that your belongings and home are fully covered after a fire, then you'll need to have a proper fire insurance policy. This is usually considered an "add-on " under your existing insurance plan.

Most insurance companies bundle fire insurance with general home insurance, especially if you live in wildfire prone area.


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