What You Need to Know about Fire Insurance

Although most homeowners have fire insurance, few actually understand how it works. Fire insurance covers four basic areas.


This is the main structure or actual home or dwelling. In the event of a loss due to fire, the actual cash value minus deductibles would be covered. It is possible to purchase additional coverage for other hazards as well as replacement value and updates required to restore the home to the former value due to code or ordinance changes.


Other structures commonly included in a fire policy include a shed, a detached garage or even a greenhouse.

Personal Property

Personal property may or may not be covered, depending upon the type of fire policy purchased. In most cases, owner-occupied residential real estate would include some portion of personal property, whereas investment or rental dwellings would not.

Loss of Use

Loss of use assists homeowners in securing safe housing while the property is being restored or repaired after a covered loss. Remember, even if you are unable to live in the home, you will still be required to make mortgage payments; loss of use helps you avoid the possibility of making double payments for rent and mortgage in the event you are unable to occupy the dwelling. Investment properties may be eligible for additional protection that provides a replacement income in the event of a major loss or extensive repairs.

Additional Coverage

Remember, fire insurance may not cover all known perils, such as flood, earthquake or hurricane-related damages. If you live in an area prone to natural disasters, it is a good idea to speak with your agent about additional coverage options that provide complete protection. Otherwise, fire insurance is often an affordable policy choice, especially for those with second homes, investment properties or other structures that require basic coverage without a high price.