Does Homeowners Insurance Cover Fire Damage? Do I Need Separate Fire Insurance?

Fire insurance is a type of coverage for your home that covers losses to your house itself, as well as your property within it, from damage due to a fire. Most homeowners and renters will be sufficiently protected for fire damage through their normal home insurance, as coverage is included in typical homeowners and renters insurance policies. But people who live in areas at a high risk of fire may want or need to purchase separate fire insurance coverage to protect their property—home insurance companies sometimes exclude homes at a high risk of fire from standard fire protection.

How Does Homeowners Insurance Cover You From Fire and Smoke Damage?

Fire insurance coverage is included in most standard homeowners insurance policies. It's one of the named perils covered in HO-2, or "named perils" coverage and is also included in HO-3, or "broad form" coverage. And fire damage will be covered even if the underlying cause of the fire is one of the perils specifically excluded from your policy. For example, if an earthquake, which is not covered under HO-2 or HO-3 policies, knocks down an electrical line and sets your home on fire, you would still be able to make a claim to your homeowners insurance.

Most of the time, you're not just limited to things that are burned up. Much of the damage caused to homes and properties by a fire can be caused by smoke, which can mar walls, furniture and other objects—and this is usually covered by normal home insurance, too.

Like any other perils covered by your home insurance policy, fires are covered up to your home insurance policy's total limit, minus your deductible. For example, suppose your home's structure is worth $200,000 and your belongings inside are worth an additional $100,000. If you had $300,000 worth of homeowners insurance with a $1,000 deductible, you would receive $299,000 from your insurance company if your house burned down and all property inside was destroyed. If you had only $200,000 worth of coverage, you'd only receive payment up to that limit, but if you had $400,000 of coverage, you would still be paid $299,000.

How Coverage Limits and Deductibles Affect Fire Insurance Payouts

Coverage LimitHome and Property Value (Combined)DeductibleAmount Paid By Insurer
$300,000$300,000$1,000$299,000
$400,000$300,000$1,000$299,000
$200,000$300,000$1,000$199,000

Fire insurance will typically cover damage to your home and property even if you caused the fire by accident. In fact, most home fires are caused by humans, whether by an unwatched candle, an electrical surge or cooking mishap, and damage caused by these are all covered. What's not covered, however, is a fire caused intentionally or by gross negligence.

Here's a breakdown of how standard homeowners insurance coverages might cover financial losses you experience as a result of a fire:

  • Dwelling Coverage: This covers the cost of repairs to the singed or burned-away portions of the house, whether they’re for contractors or plumbers. If your house is completely burned to the ground, they’ll pay you a lump sum for the house, up to your limits. This also covers smoke damage to the house itself. Payment is typically either for the actual cash value or replacement cost.
  • Personal Property: This pays to replace your clothing, furniture and other belongings after a fire. Individual types of valuables may be treated differently, as high-value items typically have limits set per-item. For example, valuable jewelry should be listed out with individual coverage amounts for each piece (known as a schedules or endorsements).
  • Liability Protection: This protects against lawsuits and related damages for an isolated fire spreading from your house to a neighbor’s property.
  • “Loss of Use” or “Additional Living Expenses” (optional): Your insurer will reimburse you for temporary lodging and food costs during your evacuation, usually for anywhere from 10% to 30% of the dwelling limit. What's considered an allowable expense differs by insurance company.

Can I Buy Standalone Fire Insurance?

Yes. In addition to coverage provided under standard homeowners or renters policies, some insurers provide policies that primarily or exclusively cover damage related to fire. It's usually called "dwelling fire" coverage and includes protection against fire, smoke, explosions and sometimes wind. Since dwelling fire coverage does not cover as many perils as standard homeowners insurance, it usually costs less than an HO-3 or HO-2 policy. You might consider purchasing standalone fire insurance instead of traditional home insurance to insure a property that is older or that has a history of claims, as a way to mitigate the high cost of insurance. Or you might add it to a secondary residence or vacation home, which can sometimes be difficult to insure.

Additionally, you might consider adding a dwelling fire policy to supplement your existing homeowners coverage. This could be because you live in an area susceptible to forest fires or have simply experienced fire loss in the past and want extra peace of mind.

Fire Insurance For Homes That Don't Qualify for Regular Coverage

Some homeowners may find that a home insurance company may not offer you insurance coverage or decline to renew your policy, due to an exceptionally high risk of fire. This might be because you are too far from a fire department, your home is too close to brush, or you live near a canyon, which can help funnel winds and create large wildfires. Unsurprisingly, these conditions are common in California, which has experienced a record number of wildfires in recent years.

If you're unable to get standard home insurance because of fire risk, you may still be able to buy a FAIR insurance policy. FAIR policies are government-backed insurance policies available in most states for homes that don't qualify for insurance on the open market, whether due to fire likelihood or another risk, like flooding. Be aware, however, that FAIR insurance plans are generally no cheaper than privately sold insurance plans and often have more bare-bones coverage than normal plans. For example, FAIR coverage in California only covers damage due to fire and smoke, but not other thing like water damage or theft. As such, if you can get fire insurance from another source, it's likely to be a better option.

One option for homeowners who live in high-risk areas is a hybrid plan that combines a FAIR plan and a regular insurance policy. In these plans, your home is covered by FAIR for fire damage only. In addition, you purchase a separate policy for the other types of coverage in standard homeowners insurance, such as damage from theft and liability protection. These plans are sometimes called difference-in-conditions (DIC) insurance.

Before you commit to a FAIR plan, make sure to check for quotes from several standard home insurance companies. Every insurer evaluates risk differently, and just because one company denies you, doesn't mean another will. Talk to your neighbors about which insurers they use: Their homes likely have similar risk profiles to yours, so a company willing to insure their home may be likely to insure yours as well. Or work with an insurance agent; they can help you find an insurance company in your area that is most likely to offer you coverage.

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