What does my fire insurance cover in a fire?

When it comes to fire damage, many homeowners assume their standard insurance will cover everything. While most homeowners policies cover fire and smoke damage, there can be exceptions, particularly in areas deemed high-risk for wildfires. It's essential to fully understand your policy and consult an insurance expert if you have any questions. We work with trusted local insurance agents who can guide you to the right coverage for your specific needs. Here’s what you should know:

Does my homeowners insurance include wildfire damage?

Standard homeowners insurance typically covers your home's structure, other structures like detached garages, sheds, and personal belongings in the event of fire damage. This coverage extends to fires caused by candles, grease, electrical faults (e.g., faulty wiring), wildfires, and lightning. However, some exclusions may apply, such as damage from nuclear hazards, arson, poor maintenance, or regular wear and tear. Contact your insurance agent for clarification if you have any doubts.

What if my policy doesn’t cover fire damage, or I can’t get coverage due to wildfires?

Similar to flood insurance, certain private insurers may exclude or not provide coverage in high-risk areas. It's important to explore different options as some insurers may have higher risk tolerance than others. For instance, "non-admitted" insurers, although not licensed by the state, can legally offer coverage, including "difference in conditions" policies to address coverage gaps. These insurers are typically accessed through surplus lines brokers who specialize in risks that standard carriers won’t cover. Note that these companies operate under different regulations and do not participate in state insurance guaranty funds, which protect policyholders in case of insolvency. Therefore, it’s crucial to ask questions and carefully review policy details.

To find a surplus lines broker, you can contact your state insurance department or consult your trusted insurance agent, who may refer you to a specialist.

What should I do if my home is deemed ineligible for fire damage coverage?

Some insurers may decline coverage for fire damage if your area is deemed high-risk based on fire maps or risk assessments. In such cases, there are steps you can take to manage costs, such as consulting an insurance professional to discuss your options, obtaining quotes from multiple insurers, including surplus lines providers, and obtaining wildfire-prepared certifications from organizations like the Institute for Building & Home Safety. Additionally, you can reach out to your state insurance commissioner for further guidance on fire insurance and risk assessments.

What is a “FAIR” plan?

If you cannot secure fire insurance through regular channels, you may consider a Fair Access to Insurance Requirements (“FAIR”) plan. Available in many states, FAIR plans are designed to provide coverage for high-risk homes that do not qualify for standard insurance in the private market. While typically more expensive and offering limited protections compared to private insurance, FAIR plans can serve as a vital safety net for homeowners facing insurance challenges.

Insurance practices can vary based on state and local laws. For specific details on regulations in your area, consider consulting a real estate professional or legal advisor. For more resources and information, visit: Facts.Realtor