Does insurance cover fire damage?

Fire is a covered peril in essentially every homeowners and renters policy, and that cover normally extends to the smoke, the water used to fight it, and the damage the fire service did to get in and to find hot spots. Unlike water and storm claims, the coverage question is rarely the argument.

The arguments are about how much, about contents, and about how long the policy will pay for somewhere else to live.

What is covered

The structure, repaired or rebuilt.
Smoke and soot damage, including in rooms the fire never reached.
Water damage from firefighting. Which is often the bigger half of the loss.
Doors, windows, walls, and ceilings opened by the fire service.
Contents, subject to limits and to how the policy values them.
Additional living expenses while the home is uninhabitable. What that actually pays for.
Debris removal, usually up to a percentage of the dwelling limit.
Emergency board up and securing.

Where it gets argued

Contents valuation. Actual cash value pays what the item was worth, which is depreciated. Replacement cost pays what a new equivalent costs, usually in two stages: the depreciated amount now, and the balance once you have actually replaced it and produced a receipt. Check which you have, because on a total loss of household contents the difference is enormous.

Sub-limits. Most policies cap certain categories regardless of the overall contents limit: jewelry, watches, furs, firearms, cash, collectibles, and often business property and electronics. If you own something that exceeds a sub-limit and it was not scheduled separately, the cap is what it pays.

Whether the dwelling limit is enough. After a total loss, rebuilding cost is what matters, not market value, and dwelling limits drift out of date. Look for extended or guaranteed replacement cost on the declarations page, which adds a percentage above the limit.

Code upgrades. Rebuilding to current building code often costs more than rebuilding what was there. Ordinance or law coverage pays for that gap and is frequently a small percentage by default. On an older house this is one of the biggest gaps there is.

Debris removal and demolition, which have their own limits.

Landscaping and outbuildings, usually limited.

Where it gets refused

Rare, and worth naming so the possibilities are known:

Arson by an insured person, or a claim inflated deliberately. Both are fraud, and both invalidate the whole claim.
A vacant property. Most policies restrict cover once a house has been unoccupied beyond a stated period, often sixty days. This catches people mid-renovation and mid-sale.
Material misrepresentation on the application, such as an undisclosed wood stove or a home business.
Excluded causes in specific policies, which are unusual for fire.

The first week, in the right order

Report immediately. Most insurers run a 24 hour line.
Ask for an advance for immediate needs, and for accommodation authorization. Both are normal and both are usually granted on the day.
Ask for the adjuster’s name and direct contact, and keep a dated log of every call.
Get the fire report number from the fire service.
Photograph everything before anything is cleaned or moved.
Do not sign a contractor’s paperwork on the first day. An assignment of benefits transfers your rights under the policy, and it will be presented to you while you are least able to read it.
Start the contents inventory. How to build the list.

Preferred contractors

Insurers maintain lists and will often recommend one. Using them is usually smoother and is not compulsory in most places. You are entitled to choose your own contractor. The trade off: a preferred contractor’s estimate rarely gets argued with, and an independent one sometimes does.

Either way, get the scope in writing before work starts, and understand who is being paid by whom.

Public adjusters

A public adjuster represents you rather than the insurer and takes a percentage of the settlement. On a large fire loss with a complicated contents claim they can be worth the fee. On a small one they usually are not. Check they are licensed in your state, and read the contract, particularly the percentage and the cancellation terms.

Renting

A landlord’s policy covers the building and nothing you own. A renters policy covers your belongings and, importantly here, additional living expenses. If you rent and the building burns, your own policy is what puts you somewhere to sleep. The wider division of responsibility.

The short version

Fire is covered, along with the smoke and the firefighting water. The arguments are about contents valuation, sub-limits, whether the dwelling limit is enough, and code upgrades. Report on the day, ask for an advance and accommodation, document before anything is cleaned, and read anything a contractor puts in front of you in the first week.