More than 300,000 homes are destroyed each year by fires, according to statistics from the National Fire Association. Starting over can be both emotionally and financially devastating. Of course, the top priority is making sure everyone gets out of the home safely. After the shock wears off, the process of repairing or rebuilding must begin.
Most homeowner’s insurance policies cover fire damages to property and will pay for repairs or replacement for damages to your home and detached buildings (garages, sheds, landscaping, smoke damage, etc.). However, homeowners should be aware that there are limits and exclusions to coverage.
Fire damage exclusions
If a home fire is caused by war, nuclear damage or arson, there is no coverage for damages. Also, if a home is left vacant for more than 30 days when the fire occurs, insurance coverage does not apply. If you aren’t currently residing in the home, owners may purchase a special policy covering vacant homes. If you have a vehicle damaged from a home fire, the damages are paid for by comprehensive auto insurance rather than your homeowners’ policy.
Additional insurance options
You can add additional coverage options to your homeowner’s policy to cover additional living expenses by endorsement. The additional living expenses (ALE) endorsement will pay living costs such as food, meals or temporary accommodations while repairs are made to your home.
Actual Cash Value (ACV)/Replacement Cost
It is important to know what coverage your homeowner’s policy allows for fire damage. The coverage will either be actual cash value or replacement cost. ACV policies will only pay damages up to the home’s actual cash value. This may not be enough to rebuild your home to today’s standards. This is especially true for older homes. By adding replacement cost to your homeowner’s insurance, fire damage will be paid for the cost to replace/repair damage to your property and belongings with new items or items of similar value. Replacement cost coverage is generally around 10 percent higher than ACV homeowner’s insurance.
There are so many things to stress about during the period following a home fire. Hopefully, insurance won’t be one of them. Make sure your coverage is up to date!
