Fire insurance is property insurance covering damage and losses caused by fire. The purchase of fire insurance in addition to homeowner’s or property insurance helps to cover the cost of replacement, repair, or remake of property, above the limit set by the property insurance policy. Fire insurance policies typically contain general detraction, such as war, nuclear risks, and similar perils. BREAKING DOWN Fire Insurance Fire insurance policies include payment for loss of use, or additional living expenses due to secluded conditions as well as damage to personal property and nearby structures. Homeowners should document the property and its contents to simplify the assessment of items damaged or lost during a fire. A fire insurance policy includes additional coverage against smoke or water damage due to a fire and is usually effective for one year. On expiration, the policyholder may restore the policy according to the conditions of the policy. Some standard homeowner’s insurance policies include coverage for fire. If excluded, fire insurance may need to be purchased separately, especially if the property contains valuable items that cannot be covered with standard homeowner’s coverage. The insurance company’s liability is limited by the policy value and not by the extent of damage or loss nonstop by the property owner.
Fire Insurance Policy Coverage
Fire insurance covers a policyholder against fire loss or damage from many sources. Sources include fires brought about by electricity, such as faulty wiring and explosion of gas, as well as those caused by lightning and natural disasters. Bursting and overflowing of a water tank or pipes may also be covered by the policy.
Most policies provide coverage regardless of whether the fire originates from inside the home. The limit of coverage depends on the cause of the fire. The policy will make good the policyholder on either a replacement-cost basis or an actual cash value (ACV) basis for damages.