Home Fire Insurance Essentials: What Does Your Fire Insurance Cover?

If you are a first-time homeowner and you are shopping for a home insurance policy, or you need to review your home insurance after several years, it helps to understand the details of your policy. It is recommended that you review your home insurance policy on a yearly basis. 

Fire insurance protects you against the worst. When there is a fire in your home, the costs to rebuild and replace your belongings can be extensive. Your home insurance policy should protect you from major financial loss by helping you pay for those repairs.

Before you decide on a policy, keep reading to find out what your fire insurance covers.

1. Structure

One of the main pillars of your insurance coverage is the structure of your home. If there is a fire, this part of your policy will pay to replace construction materials and the cost of labor required to rebuild.

This part of your policy applies to drywall, insulation, flooring, fixtures, exterior walls, the roof, foundation, and structures not attached to your home but on your property (like detached garages and gazebos).

When you file a claim, this portion of your insurance coverage will be estimated by an insurance adjuster or a contractor. Based on a list of all of the repairs that need to be made, the insurance company’s preferred contractor will provide a quote that becomes the basis for your payout.

2. Contents

The Contents part of your insurance policy covers the cost to replace your non-restorable personal belongings. It is expensive replacing lost clothing, furniture, electronics, media, etc. 

In order to receive insurance coverage for lost contents, you will have to create a list of everything that was lost or damaged in the fire. This can be a greater task than you think. By some estimates, the average household contains over 300,000 belongings. Your insurance will not cover items that you do not list when you submit a Schedule of Loss.

One concern with Contents coverage may be your coverage limit. A low coverage limit can leave you making difficult choices about what you are going to replace. Paying to have affected items cleaned (for example drycleaning clothes and other soft contents) also comes out of your content coverage limit. Be wary of authorizing cleaning if your limits are low. You will want to have as much money as possible to replace the items of most importance to you. 

3. Additional Living Expenses

After a fire, your home will not likely be safe for habitation for quite some time. First, the fire department will likely require you to stay out of the property until they have deemed it safe to enter. Even then, there will likely be months (or more) of inspections, paperwork, and repairs that need to be done before you can move back in.

Additional Living Expenses coverage is intended for the costs of renting a motel or hotel, the extra cost of living off of takeout, finding a long-term rental while repairs are made on your home, and additional costs like storage and gas. The rapid rise in the cost of rent across Canada means that you may not have enough.

4. Liability

Liability coverage can also be an important part of fire insurance coverage. While liability insurance usually applies when someone is injured on your property, it can also help you if a hazard that starts on your property spreads to a neighbor’s. For example, if a propane tank on your property explodes and starts a fire on the neighbor’s property, liability insurance should cover the additional damage if you are sued, though often your insurance company and your neighbor’s insurance company will work out a settlement between them.