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Fire Insurance: How It Works and Best Companies

If you’re thinking of buying your first home or are in the process of buying a property, you’re probably aware that you’re required by your lender to have homeowners insurance. That’s because lenders want the property to be protected from unexpected hazards — and so do you.

To protect your home and everything inside, you’ll need a comprehensive insurance policy that includes fire protection. We’ve rounded up some of the best companies in order to help you decide which policy is right for you.

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What is Fire Insurance?

Fire insurance covers damage and losses to your property caused by accidental fires. It’s typically included in a basic homeowners insurance policy with a limit on how much the insurance company will pay for damages.

Two things that aren’t covered under a homeowners insurance policy are arson and fire in a vacant home. Arson (also termed insurance fraud) means that a homeowner deliberately sets fire to his or her dwelling to collect insurance money. Also, if a home is vacant at the time of the fire — which usually means that it hasn’t been occupied for more than 30 consecutive days — it won’t be covered.

Extra Fire and Lightning Insurance

Extra fire and lightning insurance is optional and helps cover damages that go beyond the maximum amount your insurance will pay. For example, if your home and property are utterly destroyed, your homeowners policy may not pay out enough to cover replacement and reconstruction costs. An additional policy typically adds coverage for smoke or water damage that isn’t covered by standard homeowners policies.

You can also talk to your insurance agent about adding optional coverage, or an endorsement, to your existing homeowners policy to cover the cost of replacing your home and personal property. Just make sure you know the true replacement value before you buy your policy so you don’t shortchange yourself.

Fire and Homeowners Insurance Differences

There are three types of homeowners insurance coverage: basic form, broad form and special form. In addition to covering things like theft, vandalism, some weather-related events and liability, they all include basic fire and lightning coverage in their policies.

Basic Form Fire Insurance

Basic fire insurance covers the following structures and items on your property:

  • Your home
  • Other structures on your property, including garages, sheds, fences, etc.
  • Personal property, including cash, collectibles, furniture, jewelry, computers and more
  • Loss of use covers hotels, clothing, laundry service, meals out, pet boarding and other living expenses if you can’t stay in your home while it’s being repaired or rebuilt

If you haven’t determined the value of your personal property and listed the items in your homeowners policy, you will typically receive a standard amount for each item that will be set by the insurer. For example, the total payout for jewelry, watches and furs might be limited to around $2,000 to $2,500, which is likely to be far less than their total value.

Broad Form Fire Insurance

A broad form policy offers the same fire coverage as the basic form policy, as well as the rest of its listed perils, but it adds coverage for other dangers to your property, such as burglary/break-in damage, falling objects (like tree limbs), weight of ice and snow and accidental water damage.

Special Form Fire Insurance

A special form policy covers all perils of the previous two forms, including the fire and lightning provision, and anything that isn’t specifically excluded in the policy — that would be named exclusions such as earthquakes, floods, power failure, war and nuclear hazards.

How Much Does Fire Insurance Cost?

To buy basic fire insurance, you need to buy a homeowners policy, and the cost of homeowners insurance varies widely from state to state.

For example, annual home insurance premiums or the yearly amount homeowners pay for their policy currently fall between $606 in Oregon and $2,312 in Florida. An average annual nationwide cost is around the $1,000 range.

Insurance professionals can tell you how your state’s mandates will affect your premiums and coverage. It’s not only the state you live in that affects the price you pay for homeowners insurance. Other factors can also increase your premium:

Location

Your premium can be affected if your home is near a fire station, is exposed to dangerous weather extremes or is in a neighborhood where theft is common.

Dwelling Coverage

If you increase the amount of dwelling coverage in your policy — the set amount your policy will pay if your home is damaged or destroyed — your homeowners insurance rates will be higher. For example, if your home is worth $400,000 and your policy only covers up to $150,000, you will need to increase the amount of dwelling coverage and pay a higher premium.

Personal Belongings

If you know the value of your personal property (clothes, furniture, paintings, electronics, etc.) and find that it exceeds the set limit that your policy will cover for personal belongings, you may choose to increase your personal property coverage limit, but this will also raise your premium.

Choice of Deductible

Your deductible is the amount you pay out-of-pocket before your coverage begins. A higher deductible means you’ll have a lower premium and a lower deductible increases your annual costs.

Home Features

Older homes often cost more to insure and depend on the materials used to build your house, whether it’s made of brick, wood, stone or vinyl siding. Insurers also evaluate the structure, wiring, roof and garage to determine the price.

Discounts

Protective devices, such as home security systems, smoke alarms, fire extinguishers, sprinkler systems and deadbolts are helpful in reducing your homeowners insurance premium. You can also save when you bundle home and auto policies together.

Personal Factors

If you smoke, it may increase your home insurance premium. A good credit history can often lower it.

Claims History

If you have a history of filing homeowners insurance claims, you may be considered a higher- risk customer and may have to pay a higher premium.

Personal Liability Coverage

Coverage limits in a standard homeowners insurance policy generally start at $100,000, but insurers increasingly recommend purchasing at least $300,000 to $500,000 worth of liability coverage. The more personal liability coverage you choose, the higher your annual premium.

When is Fire Insurance Worth It?

Fire insurance is definitely a good idea if your property’s value exceeds the limit that your insurance company will cover. The right amount of coverage to rebuild your home if necessary to replace your personal property or to meet your living expenses while your house is being replaced can give you a solid sense of security. If you live in a state where fires are common, the peace of mind fire insurance gives you will be priceless.

How to Get Fire Insurance

Choosing the right company for your fire insurance needs will require a little homework. You can start by going online and comparing the home insurance policies of various insurance providers — their products, coverage amounts, deductions and special discounts — and get multiple quotes.

When you’re ready, you can also find an agent online or call the number provided to ask more specific questions about coverage. Home insurance policies are as individual as you are, and a knowledgeable agent can help determine the best fit for you.

Our Picks for Best Fire Insurance Companies

Since most homeowners policies cover fire and lightning damage, choosing the best fire insurance companies starts with choosing the best home insurance companies. Once you know the value of your home and possessions, you will know if your homeowners policy gives you enough coverage to protect your assets or if you need to add additional coverage.

What to Look for in a Company

Each homeowner has a different situation, so you will have to get quotes from several good insurers to see which gives you the best coverage for the best price. These are some of the things that will make a difference:

Customer Satisfaction

The best companies perform well in J.D. Power’s home insurance survey — a measure that analyzes a number of areas, such as price, customer service and claims satisfaction, to gauge overall customer satisfaction.

Multi-Product Savings

Good companies also offer discounts when you buy more than one policy, for example, bundling your primary home and auto insurance.

Quick, Convenient Claims Service

The best companies have a reputation for handling claims well and ensuring a smooth process with fewer customer complaints.

A Comprehensive Home Insurance Offering

The company’s priority is meeting the needs of a large number of customers with a broad spectrum offering that includes options for increasing the amount of fire insurance, if necessary.

Best Overall: Amica Mutual

Amica may not be as well-known as many other insurers, but the company has offered fire and auto insurance for more than 100 years and is a good choice for new home insurance customers.

Nationally recognized for its excellent customer service, Amica was named the highest-rated home insurance provider in a recent J.D. Power survey in every category.

Read Benzinga’s full Amica Review

USAA

USAA is one of the top 10 home insurance companies with some unique perks. You can insure your home and personal belongings at today’s value, with no depreciation factored in.

It offers policies that cater to military families and requires no deductible for loss due to a covered peril, military uniforms or equipment owned by the member when the loss occurs while on active or reserve duty.

Members who bank with USAA Bank can have their claims paid promptly with direct deposit. Policyholders can report claims, submit photos, view status and more with the convenient USAA mobile app.

Read Benzinga’s full USAA Review

Allstate

Allstate has a massive nationwide network and caters mostly to middle-class policyholders.

It offers a broad range of products to meet most of the needs of the families but offers less of the specialized products some customers need.

Read Benzinga’s full Allstate Review

State Farm

State Farm writes more policies for homeowners than any other insurer and offers comprehensive home insurance policies nation-wide.

A popular choice for policyholders, State Farm writes the highest number of premiums, has the largest market share and boasts a low consumer complaint ratio. Their all-risk policy will cover anything left out of a traditional home insurance policy, so you’ll always have coverage.

Staying Safe

While homeowners insurance is a mandate when you carry a mortgage, you still need fire protection when you own your house outright. So don’t put it off. Do your homework, talk to an agent and find the policy that’s right for you. You just may find that you sleep better at night

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