If your house burns down, what does insurance cover?

According to the latest data from Statistics Canada, residential fires are the most frequent type of structural fire, making up approximately 60% of all reported fire incidents. Cleanup and rebuilding costs after one can be astronomical. In fact, according to Restoration Mate, a 24-hour emergency cleanup service in Toronto, typical restoration after a minor house fire can be around $5,000, and for severely damaged properties, costs can escalate into the hundreds of thousands.

Imagine not just losing everything, like your furniture, heirlooms, or even the house itself, but also facing these bills alone. Luckily, you won't have to, thanks to your home insurance policy! It's there to help cover rebuilding costs, replace belongings, and even help with alternative living expenses while your home is repaired or rebuilt. Below, we explore how home insurance steps up in the event of a fire and what going without it could cost you.

What does home insurance typically cover when it comes to fire damage?

Home insurance in Canada is typically divided into four parts:

• Dwelling coverage

• Contents coverage

• Personal liability coverage

• Additional living expenses

If a fire damages or destroys your home, having home insurance can make a world of difference in helping you recover. Although the exact coverage can vary depending on your policy, the following offers a general overview of what home insurance usually includes after a fire occurs:

Dwelling coverage

When fire damages your home, this covers the cost to repair or rebuild the physical structure of your home, including walls, roof, floors, built-in appliances, and attached structures like garages or decks. Your insurance company will pay up to the policy’s limit to restore your home to its previous condition, using similar materials and quality.

Contents Coverage

Contents insurance helps replace your personal belongings damaged or destroyed by fire. This includes everything from furniture and electronics to clothing and kitchenware. You can choose between actual cash value coverage, where you receive what your items are worth today, or replacement cost coverage, meaning you’ll receive the amount needed to buy new items.

Personal liability coverage

Fires sometimes spread and affect neighbouring properties or injure others. Personal liability coverage protects you if you’re found legally responsible for fire-related damage or injuries to third parties. It can cover legal fees, settlement costs, and medical expenses, up to your policy’s limit.

Additional living expenses

Finally, if your home is uninhabitable after a fire, this coverage steps in to help pay for temporary living arrangements while your home is being restored, up to your policy limit. This can include hotel bills, rental costs, meals, and even extra transportation expenses. Do you need help reviewing your current insurance policy? Contact BrokerLink to speak to a licensed broker today.

When does home insurance not cover fire damage?

When you purchase a home insurance policy, depending on the type of coverage you choose (standard, broad, or comprehensive), you can choose to have certain risks, or perils, covered, like fire damage. However, there are some important exceptions that could leave you without coverage if certain conditions apply, such as:

Arson or intentional acts

If it's discovered through the investigation that you or someone in your household intentionally set the fire, your insurance provider will deny your insurance claim. Insurance is designed to protect against accidental fires and will not cover arson or intentional fire damage.

Illegal activities

Fires caused during illegal activities are generally excluded from coverage. Insurers can void your policy if they find out the property was being used unlawfully. Some examples may include:

• Running an unauthorized grow-op in your home

• Operating an illegal business out of your home

Business activities

Even if you're operating a legitimate business out of your home, if you have failed to notify your insurance company about the business use of your home, they may deny your fire insurance claim. Standard home insurance does not cover commercial use of your home. You would need to add a home business endorsement or purchase home business insurance.

Vacancy

If your home has been vacant for an extended period (typically 30 days or more), and you haven’t informed your insurance provider or arranged for vacancy coverage, fire damage may not be covered. Vacant homes pose higher risks and require special provisions in your insurance policy.

Misrepresentation

It’s important to make sure your insurer knows about any special features or risks associated with your home. This helps ensure your policy accurately reflects your home’s value and risk level. Failing to disclose important details could lead to denied claims or even cancellation of your coverage.

For instance, if you don’t mention that your home has a fireplace and a fire starts there, your insurance provider may reject the claim on the grounds that your application was incomplete or misleading.

Negligence

Some insurance companies may deny claims if the fire was caused by or made worse due to extreme carelessness, such as failing to replace the batteries in or maintain your smoke detector(s).

How to file a residential fire insurance claim in Canada

At BrokerLink, we understand how overwhelming it is to experience a house fire. We also know that knowing how to navigate the insurance claim process can help make recovery easier. Here’s our step-by-step guide should you ever need to file a fire insurance claim in Canada:

1. Contact your insurance company

As soon as everyone is safe and emergency services have been contacted, notify your insurance provider or insurance broker about the fire. Thankfully, most insurance companies have 24/7 claims lines.

According to the Government of Canada, the time limit for submitting a claim generally varies between 90 days to 12 months. Nevertheless, you should report the fire to your insurer as soon as possible because the sooner you do, the faster the claims process can begin.

2. Document the damage

Take photos and videos of all damage. Once the authorities say it is safe to do so, make sure you get evidence from both inside and outside your home. You'll also need to make a list of all of your damaged or lost belongings. Having a home inventory list already prepared can help to speed up this process.

3. Claim investigation

Your insurance provider will assign an insurance claims adjuster to inspect the property and assess the damage. They may also speak to witnesses and the police officer(s) who attended your home. They'll review the police report, your list of damaged belongings, and any other details they've collected through their investigation. Then, they’ll determine what repairs or replacements are needed and what’s covered under your policy.

4. Get estimates for restoration

Contractors or restoration companies may be brought in by your insurance company to provide cost estimates. You can also reach out to contractors or restoration companies on your own and submit their estimates to your insurer. They will then review these quotes to ensure they align with the policy’s limits and conditions.

5. Get approved and start restoration

Once the claim is approved, your insurer may issue a payout to you or coordinate directly with the contractors to cover the cost of repairing or rebuilding your home. Then, depending on your policy, you may also receive funds to replace your personal belongings (contents coverage) and temporary housing (additional living expenses).

How to manage fire risks at home

While you can’t prevent a spreading wildfire from swallowing up your home, there are plenty of proactive steps you can take to spot and reduce common fire hazards in your home. Here’s how you can help protect your home, along with accompanying data and statistics gathered by Accomsure, a Canadian company that helps displaced policyholders relocate to temporary housing. Suggested path forward:

• Install smoke and carbon monoxide detectors, and test them regularly to ensure they’re working properly.

• Schedule an annual furnace inspection and replace or clean air filters as needed.

• If you smoke, always extinguish cigarettes fully in a deep, sturdy ashtray. During a 10-year period, smoking materials (cigarettes, pipes, cigars, matches, lighters) caused 205,332 structural fires and 15,326 injuries and fatalities across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and New Brunswick.

• Clear the lint trap in your dryer before and after every load to reduce fire risk.

• Consider upgrading old or outdated electrical systems to meet modern safety standards. Electrical issues are responsible for 20% of all fires in Canada.

• Make sure you have working fire extinguishers in common fire-prone areas, such as the kitchen and laundry room. In Canadian homes, cooking equipment is the number one cause of residential fires.

• Avoid overloading electrical outlets and unplug appliances when not in use to prevent overheating or electrical fires. Extension cords alone are linked to roughly 3,300 home fires in Canada each year.

Get a comprehensive home insurance policy with BrokerLink

If you're looking for affordable home or condo insurance in Canada, contact BrokerLink. Not only can we find you an affordable insurance policy, but one that's tailored to your specific needs and lifestyle.

You can reach us by phone, email, or in person at any one of our locations throughout Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be happy to assist you. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.

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