Why Supplemental Fire Insurance Is Important

Are you worried about what a fire may do to your home or business? Learn ways fire insurance can protect your assets.

There are many reasons why you may want fire insurance to protect your home or business. Perhaps you have already experienced losses from a fire in the past. Alternatively, you may just want every measure in place to protect your family or business. Whatever your reasons are, selecting the right supplemental fire insurance is definitely important.

Fire is one of the most frightening things you can deal with as a home or business owner. It can strike unexpectedly, and it can cause total emotional, as well as financial devastation. Some losses that occur from a fire are unavoidable, such as the loss of family heirlooms, photographs, or pets. However, you can recover financially from many fire losses with the proper fire insurance policy. Here are some things to know before selecting supplemental fire insurance for your home or business.

What is Fire Insurance?

As a home or business owner, there are many types of insurance you can purchase. Each one protects you under different circumstances. Fire insurance is designed specifically to provide financial reimbursement to you when your property is damaged by a fire. That reimbursement may be to cover damage to the building itself or its contents. Certain assets on the property may also be financially covered by fire insurance. Additionally, some fire insurance policies cover part or all of medical bills incurred when someone is injured in a fire on your property.

Basic Fire Insurance Coverage

According to U.S. News & World Report, a standard homeowners policy includes some fire coverage. Some policies also provide monetary reimbursement to cover temporary relocation during repairs. However, not all policies are the same, and not all of them provide as much coverage as you may desire against fires. It is important to check your policy carefully. Pay special attention to issues such as:

  • Is injury coverage provided?
  • How much monetary reimbursement for property damage is provided?
  • Does the source of the fire matter in terms of what coverage is provided?

The fire source is particularly important to consider. Some fire insurance policies cover fires originating both outside and inside. However, other policies do not pay when fires start in certain manners. For example, if you live in an area prone to wildfires, you must make sure your policy includes wildfire damage.

Why Do You Need Supplemental Fire Insurance?

You may decide the fire coverage provided by your basic homeowners policy or business insurance policy is not sufficient. If that is the case, you can apply for supplemental fire insurance. A supplemental policy is held in addition to your existing policy. It may provide additional funds after any fire, cover losses in additional types of fire scenarios, or both.

Many states have special supplemental fire insurance laws providing extra protection for policy holders. For example, your state may allow you to request that your damaged or destroyed property be repaired or replaced directly. Taking advantage of that option prevents you from having to use funds to setup repairs or find replacement assets yourself. However, you must typically have a well documented list of assets, often with photographs, in order to take advantage of such options.

Another reason supplemental fire insurance may become necessary is if the value of your home, business, or assets changes from one year to the next. Your basic policy may have a cap on the amount of monetary coverage it provides. A supplemental fire insurance policy allows you to make up the difference. For that reason, it is important to have the value of your property reassessed annually.

Supplemental Fire Insurance Policy Types and Upgrades to Choose From

If you are looking for supplemental fire insurance for your business, you need a Business Owner's Policy (BOP). A basic BOP is fairly standard. However, you can typically customize your BOP by selecting from a list of upgrades for it. Select upgrades for a BOP based on risk assessments of your business. For example, if your business is heavily computer-based, you may opt to add an upgrade that provides extra “lost data” or “interruption of computer services” coverage after a fire. Similarly, a business with a lot of machinery may require you to add extra coverage for electrical fire damage.

If, on the other hand, you are interested in supplemental fire insurance for your home, there are many policies to choose from. You must select the coverage you need based on the existing coverage you have and the type of property you own. You might require more of any or all of the following coverage types than your basic homeowners policy provides:

  • Dwelling Coverage – This coverage pays for the rebuilding of the main structure itself.
  • Other Structures Coverage – You may need this coverage type if you own and live on or rent out a property with many structures, such as barns and sheds.
  • Personal Property Coverage – This coverage is usually a percentage of the value of your dwelling coverage. It is used to pay for replacement of items you owned that were destroyed in a fire, such as clothing.
  • Additional Living Expense Coverage – This coverage is also sometimes called “loss of use” coverage. It helps to pay your basic living expenses when the property is so damaged by fire that you cannot live on it until it is repaired.

Be Thorough When Selecting Supplemental Fire Insurance Policies

Supplemental fire insurance policies do not always cover all scenarios. Make sure you know all of the inclusions and exclusions a policy lists. You may discover certain types of fire-related accidents are more difficult to find sufficient insurance coverage for than others. However, with thorough research and persistence you can find the supplemental fire insurance policy that is right for you.