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Wildfire & Fire Insurance 101: Home Insurance in High Fire Risk Areas

the principles: how does fire insurance work?

A residential or commercial fire insurance policy is a legal contract between the policyholder and the insurance company. will not proceed if neither party gives express consent or agreement to the terms of the policy. Any fire insurance policy may be null, void or voidable if it does not have the elements of a valid contract, namely:

  • offer

    Reading: How much is fire insurance per month

    consideration

    acceptance

    mutuality

    The policyholder (you) must have insurable property to apply for fire insurance. such insurable property may be owned by you or by someone who has only been entrusted to you through a binding agreement. Accordingly, fire insurance is not available to people who do not own property or have custody of someone’s property.

    The policyholder, by agreeing to the terms, must provide a monthly or annual payment to the insurance company underwriting the fire insurance policy. In insurance jargon, this is called a premium. Premiums are calculated based on the value of the covered property, its structure, its location, and how it is used.

    In exchange for premiums paid, a fire insurance policy will recover the policyholder’s losses in the event their property is damaged or destroyed by fire. this is done by providing cash equivalent to the depreciated or undepreciated value of the covered property.

    The policyholder must file a claim in order to use their fire insurance policy. this means providing a letter stating that a covered peril has occurred and meeting the insurance company’s requirements for the claim to be approved.

    risks covered by fire insurance

    Fire insurance policies underwritten by different companies vary in features. however, expect all to provide coverage for the following risks:

    fires and forest fires

    Fires or wildfires resulting from ignition, combustion or smoke are the main risks covered by a fire insurance policy. fires resulting from deliberate actions are not a covered peril. the same occurs if the thing covered was burned by order of a judicial authority.

    lightning

    Fire insurance also provides coverage if your property is burned by lightning. It is common knowledge that lightning can burn or ignite the object it strikes. that is why it is a covered risk in fire insurance policies.

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    explosions

    Fire insurance policies cover explosions caused by electronic devices or specific flammable objects. explosions due to a sudden increase in the internal temperature of a covered property are also covered. Please note that fire insurance does not activate if a boiler, heater or other similar device causes an explosion.

    plane

    Fire insurance will recover losses if your property is destroyed by a plane, helicopter or any other aerial vehicle. any damage or loss caused by accessories or cargo falling from an aircraft onto your property will also be taken care of.

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    riots and vandalism

    Fire insurance policies will take care of damage or loss to your property due to riots and vandalism. Arson may or may not be covered depending on the insurance company you decide to work with.

    extreme weather

    Fire insurance will provide coverage if your property is lost or destroyed due to extreme weather conditions. In particular, what is covered are typhoons, storms, floods, earthquakes, storms, cyclones, hurricanes and tornadoes.

    impact

    Fire insurance covers impact damage. In practice, you will recover financial losses if a vehicle or any other machine collides with your property. therefore, fire insurance is very useful for commercial buildings and homes near public roads

    missile test

    Fire insurance will cover costs if your property is hit by a missile or any other projectile. however, coverage only applies if the missile or projectile landed on your property due to testing. fire insurance won’t help if your property was deliberately attacked.

    something important to understand

    Fire insurance, in its most basic form, will only protect your property against fire, wildfire, and lightning. To cover other risks that we mentioned above, you must add optional coverages or introduce endorsements to your fire insurance policy.

    what does fire insurance cover?

    Here’s a full list of some of the costs covered by a standard fire insurance policy.

    destruction of property

    First, your insurance is designed to cover the loss of your home or other insured buildings. For many people, their most valuable possession is their home.

    However, fire insurance will also cover personal items such as furniture, electronics, collectibles and more. As long as you claim these items on your policy, then they should all be covered when it comes time to collect your payment.

    Just keep in mind that as you add new items to your home, you may need to call your insurance provider and provide them with the details so they have a record that the item is in your home.

    smoke damage

    Sometimes a fire may not destroy the entire building and may only be confined to a certain room. however, smoke damage from fire can spread to walls and ceilings, compromising the integrity of the structure. Fire insurance coverage typically covers cleanup and repair costs due to smoke-related damage.

    personal injury

    If you (the policyholder) are injured while on the insured property, you will be eligible for a personal injury payment and to help pay for medical bills.

    food and lodging

    after losing everything, most people have to rent a hotel or a second home. they may also have to pay extra money to eat out. Fortunately, your insurance company must pay all of these related costs.

    what fire insurance does not cover

    There are a couple of things that are excluded from insurance policies.

    your vehicle

    It is not uncommon to lose your car or motorcycle during a house fire if it was in the yard or parked in the garage. however, these are generally not covered. you will need to seek compensation for your vehicles through your auto insurance policy.

    if the house was unoccupied

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    If the property has been vacant for more than a month, many standard insurance policies will refuse to cover the costs. they will try to say that the fire was caused by negligence that could have been prevented if the owner had been there.

    filing a fire insurance claim

    As stated above, you must file a claim to use your fire insurance. take the first step when experiencing property damage or loss due to a covered peril. don’t wait for the insurance company to ask if you want to use your fire insurance before it expires. With that said, here are the steps to file a fire insurance claim.

    report the incident to the insurance company

    Immediately inform the insurance company that you experienced a covered peril and tell them you want to use your fire insurance policy. You can do this by calling or emailing the carrier’s claims department.

    If your insurance company only works with agents, then reporting a claim is done by contacting the insurance agent or broker who sold you the fire insurance policy.

    get a claim form

    upon learning that you experienced a covered risk, the insurance company will send you a claim form by email, fax or mail. But if you’re working with an online insurance company, you’ll need to fill out a claim form on a website. Please understand that it may take a few days for the insurance company to review your claim form. and therefore expect to do some waiting.

    send the requested papers

    After reviewing your claim form, the insurance company will contact you and ask you to submit the documents. They can be photographs, affidavits or any other document that shows that you have suffered a loss due to a covered risk.

    survey and evaluation

    The insurance company could do another round of verification by sending an insurance adjuster for a survey or assessment. expect this to happen if the covered peril resulted in significant loss on your part and the amount you need from your fire insurance policy is substantial.

    claims settlement

    The final step is claims settlement. This is when the insurance company agrees or disagrees that you want to use the funds from your fire insurance policy. Please note that you can dispute in a court of law if your claim is denied. You can also report the matter to your state insurance department.

    how to deal with an insurance adjuster after a house fire?

    Although your insurance adjuster may seem a bit cold and uncaring, that’s their job, so don’t let it get to you. Here are some quick tips to help you deal with an insurance adjuster in the event of a fire in your home.

    • make a detailed inventory of all lost items

      clearly state the nature of your loss

      stay calm and collected even if you experience a lot of back and forth with the insurance adjuster

      request a review of the terms of your fire insurance policy and reference that in your fine print

      keep receipts for every purchase or expense

      be patient. you will get your money

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