Fire Insurance

The term fire insurance refers to a form of property insurance that covers damage and losses caused by fire. Most policies come with some form of fire protection, but homeowners may be able to purchase additional coverage in case their property is lost or damaged because of fire. Purchasing additional fire coverage helps to cover the cost of replacement, repair, or reconstruction of property above the limit set by the property insurance policy. Fire insurance policies typically contain general exclusions such as war , nuclear skins and similar perils.

KEY TAKEAWAYS

• Fire insurance is property insurance that provides additional coverage for loss or damage to a structure damaged or destroyed in a fire.
• Fire insurance may be capped at a rate that is less than the cost of the losses accrued, necessitating a separate fire insurance policy.
• The policy pays the policyholder back on either a replacement-cost basis or an actual cash value basis for damages.
• Although some homeowners insurance policies include fire coverage, they may not be extensive enough for some homeowners.