What is fire insurance?

12 minute read Published on Jun 20, 2024 by BrokerLink Communications

A close up of a smoke cloud below a closed door of a room on fire

Fire insurance is a key part of any insurance policy. You will also find it in condo insurance and even renters insurance policies. Below, we explain what fire insurance is and how it can benefit you.

Fire insurance explained

Fire insurance is a vital part of any home insurance policy in Canada. When you add fire coverage to your policy, you will be able to file a claim if a fire damages your home or personal property. From there, your insurance company can issue a payout that helps repair, replace, or rebuild your property and personal belongings after a fire.

You will find fire insurance on all types of property insurance policies, including vacation property & cottage insurance policies and tenants and renters insurance policies. The only thing that differs from fire insurance in tenant insurance policies is that it typically only covers the replacement of personal belongings that are damaged in fires. Physical damage to a rented unit that is caused by a fire is usually covered by the landlord’s insurance policy, which features dwelling coverage.

How does a fire insurance policy work?

Fire insurance works by protecting policyholders against property damage caused by fires in their homes. It may protect policyholders against fire damage to the physical structure of their home, such as the walls, windows, doors, roof, and foundation, or to their personal belongings, such as clothing, artwork, sporting equipment, and furniture. Most home insurance policies, including basic policies, offer a combination of the two.

Despite your fire safety efforts, it’s possible that a fire will break out in your home. If this happens, and you have fire coverage as part of your policy, you can file an insurance claim with your provider.

Let’s say that a grease fire breaks out while you’re cooking in the kitchen. In turn, it damages your kitchen wall, ceiling, and some of your kitchenware (e.g. plates and utensils). In this instance, you would file a claim with your home insurance provider. The damage to your wall and ceiling would likely be covered by the dwelling coverage portion of your policy, whereas the damaged kitchenware would be covered by the contents coverage or personal property coverage portion of your policy. So long as the fire was a named peril in your policy, your plan will cover you.

After submitting a fire coverage claim, your insurance company would review the claim and issue a payout. The payout you receive would be less than your insurance deductible and up to the policy limit. Since fires can have major consequences and even result in total losses, it’s best to choose high coverage limits for fire insurance. This way, if your entire home burned down, along with everything in it, your insurance would still cover you.

Given how fire insurance can protect you, adding it to your policy is one of the top home protection tips.

Types of fire insurance coverage

There are a few different types of fire insurance coverage that can be added to your home insurance policy in Canada. Most of the time, fire insurance coverage is part of a comprehensive property insurance plan. However, sometimes, it can also be purchased as a standalone policy. Keep reading to discover a few types of fire insurance coverage that may be available to you:

Fire insurance coverage as part of a basic or comprehensive home insurance plan

Fire insurance is typically included in all home insurance plans, whether you choose a basic property insurance plan or a comprehensive one. As mentioned above, fire will usually be a covered peril in both the dwelling and contents coverage portions of your policy.

Independent fire insurance policy

Depending on your insurance company, you might also be able to purchase an independent fire insurance policy. This is a standalone policy that would solely handle fire-related claims. Standalone fire insurance plans are usually far more limited than general home insurance policies, as they only protect you against fire damage. Water damage, liability losses, and more would not be covered.

Wildfire insurance

Wildfire insurance is a type of insurance coverage that specifically covers wildlife. Wildfires can be extremely dangerous, especially in certain parts of the country. If you live in a part of Canada that is prone to wildfires, you may be required to add wildfire insurance to your home insurance plan. It is usually added as an endorsement or rider.

What types of fires does a fire insurance policy cover?

The reality is that fire insurance policies range between policyholders and insurance companies. Therefore, not all fire insurance policies cover the same types of damage. That said, most fire insurance plans will cover you for the cost of repairing or rebuilding your home or personal belongings if they are damaged in a fire relating to the following risks:

  • Smoke damage
  • Lightning
  • Kitchen fires
  • Gas leaks
  • Electrical fires
  • Faulty appliances
  • Accidental fires
  • Fireplaces
  • Candles

Please note that if you want any detached structures on your property, such as sheds, gazebos, or fences, to be covered against fire damage, you may need to purchase other structures coverage.

What is not covered by fire insurance coverage?

You should not expect your fire insurance policy to cover the following types of damage:

  • Acts of arson or any intentional acts that led to the fire
  • Fraudulent activity
  • Illegal activity
  • A poorly maintained electrical system
  • Fire damage while your home is vacant (unless you purchase vacant home insurance)

How does fire insurance protect policyholders?

There are three main ways that fire insurance is designed to protect policyholders. First, it protects the structure of their home. Second, it protects the contents of their home, i.e. their personal belongings. Third, it protects you against the extra costs of having to temporarily live elsewhere while your home is repaired due to fire damage, which is known as additional living expenses coverage. We explain each type of protection below:

Fire insurance protects the structure of your home

First, fire insurance will protect the physical structure of your home if it is damaged in a fire and needs to be repaired or rebuilt. Depending on your policy, it might also pay for physical damage done to exterior buildings, such as a shed, detached garage, or fence. Examples of costs that may be covered by this portion of your fire insurance policy are as follows:

  • Interior and exterior damage to your home
  • Repairing or replacing windows, doors, and the foundation
  • Repairing or replacing flooring
  • Replacing fixtures damaged by fire, e.g. plumbing or lighting fixtures

When your home is damaged in a fire, you will notify your insurance company. They will then find a contractor to give them a quote for the repairs, and this quote is what they will base the insurance settlement offer on. As the policyholder, you will usually have a choice between taking the settlement and hiring an independent contractor yourself or accepting the contractor the insurance company has chosen.

Fire insurance protects the personal contents of your home

Next, fire insurance protects the personal contents of your home. Personal contents is a fancy name for personal belongings or items. If your personal items are damaged in a fire, your insurance company can reimburse you for them, allowing you to replace them. The types of items that your policy covers may vary but typically include:

  • Electronics, e.g. laptops, smartphones, computers, or televisions
  • Clothing and linens
  • Furniture and decor
  • Entertainment media, e.g. books
  • Dry, wet, and frozen food.
  • Sporting equipment

Please note that the contents coverage portion of your policy does not usually cover items like fixtures or windows. Rather, these will be covered by the dwelling coverage portion of your policy.

In addition, all contents coverage fire insurance policies have coverage limits. You will only be covered up to the coverage limit, so if the value of the items lost exceeds the limit, you will need to pay the rest out of pocket. Further, not all items can be covered under basic fire insurance. Certain high-value items, such as original artwork, fine jewellery, vintage wine, or musical instruments, may require an additional rider or endorsement if you want them to be covered in the event of fire damage.

Fire insurance protects you against additional living expenses

Lastly, your fire insurance policy can protect you against the cost of additional living expenses if the fire damage renders your home temporarily uninhabitable. For example, if the fire was so severe that an entire floor in your house was damaged, you may have to move out until the repairs are complete. During this time, the additional living expenses portion of your fire insurance policy would cover the associated costs. These costs may range from renting a hotel or Airbnb to buying meals or putting items in storage. A few examples of the costs that may be paid for include:

  • Temporary accommodations, e.g. hotel stays
  • Food costs that are above your usual spending
  • Travel costs, e.g. if you decide to stay with family or friends during this time
  • Moving expenses and storage costs

Please note that most additional living expenses coverage does not pay for lost wages, mortgage payments, or utilities that are incurred during this time. However, you might be able to call some of your providers, such as your cable, internet, and hydro providers, and ask them to suspend your services until you move back into your home.

As soon as your home is habitable once again, you can move back in, and your additional living expenses coverage will no longer cover you. It is worth noting that even if you decide not to move back in right away, your additional living expenses coverage will no longer be available to you as soon as your home repairs are complete.

Does insurance cover forest fires?

Forest fires, also known as wildfires, are unique from house fires. They pose a different type of threat to homeowners, which is why they are not covered by basic fire insurance. That said, if you live in an area that is prone to wildfires, then your home insurance company will likely require you to add a special type of forest fire coverage to your policy. This usually takes the form of an insurance endorsement that is designed to cover a wide range of natural disasters, including forest fires.

Typically, forest fires are a risk during the summer months in Canada, and they are most likely to occur in Alberta and British Columbia, though they can occur all over the country, including in Ontario, Quebec, the Yukon, and the Northwest Territories.

What factors affect fire insurance cost?

The cost of fire insurance varies across Canada. Some policyholders will pay more for it than others based on a number of circumstances. To calculate your fire insurance premium, a home insurance company will consider the following factors, among others.

There isn’t a specific cost for additional fire insurance. Premiums are usually lumped in with your home policy. Rates vary based on these factors:

  • The value of your home
  • How close your home is located to fire hydrants
  • How close your home is located to the nearest fire department
  • The fire safety features in your dwelling
  • Your location in the city
  • Your policy limit
  • Your deductible
  • Whether you need additional coverage, such as a natural disaster endorsement
  • Your insurance claims history

We dive deeper into some of these factors below:

Your home address

An insurance company will use your home address to determine whether you live in an area prone to wildfires. This will give them an idea of how likely your home is to suffer damage from a fire, which in turn, will help them calculate your risk.

Your property’s value

The value of your home is another factor that an insurance company will use to determine your home insurance rates. If your home is worth a lot of money, then it will cost the insurance company more to repair or rebuild it if it is damaged in a fire. Thus, your premium will likely be higher than if your home is less valuable. This is the same for car insurance. If you drive an expensive car, you will likely pay a higher auto insurance premium because if you are involved in an accident, the cost of repairing or replacing your car would be greater.

Your limit and deductible

As the policyholder, it is up to you to decide what coverage limit and deductible to select. The higher the coverage limit, the more protection you will have, but the more expensive your policy will be. In contrast, the higher your deductible, the less money your insurance company will have to pay in the event of a claim, and the lower your premium will be. If you need help choosing your fire insurance limit or deductible, contact BrokerLink today.

The type of fire insurance policy you buy

As you now know, there are a few different types of fire insurance policies. Standalone fire insurance plans tend to be cheaper. This is because they provide far less coverage. With a standalone fire insurance plan, your home will only be covered against fire damage - not any other risks. Meanwhile, a comprehensive homeowners insurance plan will usually cost more, but it will also provide a lot more coverage.

Your home’s safety features

If your home contains lots of safety features, such as smoke detectors, sprinkler systems, and fire extinguishers, your insurance company may be willing to give you a discount on your policy. The same goes for installing a burglar alarm system in your home, as these types of systems help prevent theft, just like smoke detectors can help you avoid a serious fire.

If you’re looking to save money on your fire insurance policy, you may wish to consider bundling your home and auto policies. Buying two or more policies from the same provider can result in a big discount.

As you can see, the cost of fire insurance is not the same for all Canadian residents. Since so many factors are considered, you can expect premiums to be different, even among homeowners in the same city or province. To find out how much fire insurance will cost you, reach out to BrokerLink today. One of our insurance advisors will be pleased to offer you a free fire insurance quote.

Filing a fire insurance claim with your insurance company

If your home suffers a fire, then you will need to notify your insurance company. This is the only way to begin the claims process and recoup your losses. By filing a claim, you can receive a payout from your insurance company to help cover the cost of any necessary repairs, rebuilds, or replacements. Learn more about how the fire insurance claims process works below:

1. Contact your insurance company

First, contact your fire insurance company to let them know that a fire occurred. They can walk you through the insurance claims process and give you any forms that you need to fill out.

2. Submit your claim

Next, fill out the paperwork given to you and submit any relevant evidence, such as photos and videos of the damage.

3. An insurance adjuster will investigate your claim

Once submitted, an insurance adjuster will investigate the claim and work with local contractors to determine how much the cost of repairs will be. If any personal items were lost in the fire, the adjuster will also determine the replacement cost of those belongings. From there, they will make a recommendation on an insurance payout amount.

4. Receive an insurance payout from your insurance company

Based on the insurance adjuster’s findings, your insurance company will issue a payout to cover the necessary costs. The payout you receive will ultimately be based on the value of your home and the items inside of it. When it comes to personal belongings, you will submit a detailed list of the items that were damaged and then receive a payment to cover this specific portion of your claim.

Contact BrokerLink

If you still have questions about fire insurance or home insurance in general, BrokerLink is here. We know the ins and outs of property insurance, including fire insurance coverage, and can help guide you through the process of finding a policy.

Whether you’re looking for standalone fire insurance coverage or a comprehensive homeowners insurance policy, call BrokerLink today. One of our licensed insurance advisors will be pleased to help you shop around for the best possible coverage. We can also give you tips on ways that you can save money on home insurance to make it even more affordable.

Get in touch with BrokerLink today to get your free fire insurance quote. We offer free quotes online, in person, or over the phone.

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