Homeowners and fire insurance

Home Fire InsuranceA typical Arizona homeowner’s insurance policy will cover you in case of fire, so almost everyone already has fire insurance. You won’t need to run out and buy a separate policy to cover yourself. Even though most people have fire coverage, however, not many understand exactly how fire insurance works. Almost every fire policy is composed of four parts: An insuring agreement, definitions, exclusions, and conditions. Your insurance agent can help you to interpret all of these sections, and it is worth your while to read your policy in regards to fire. There are also four different areas of coverage in regards to fire claims.

The first area covered is the dwelling itself. The second area covers structures such as a detached garage, gazebo, shed, pool, or guest house. The third area of coverage is personal property, meaning the contents of the home at the time the fire occurred. The fourth and last area of coverage is for loss of use or additional living expenses. This means that your insurance company will pay for you to move out and live somewhere else while your home is being repaired or rebuilt.

If you want additional coverage, you can add what are called endorsements. Endorsements are essentially “add-ons” to your policy. These might be used to cover expensive collectibles or rare items, jewelry, furs, or art. These add-ons are called personal property endorsements, which allow a homeowner to cover a specified item. The payout for a loss such as fire is equal to an amount agreed upon by the insurer. For example, if a $5,000 painting is lost in a fire, the insurance company will pay out $5,000 with no deductions made for depreciation and without requiring a deductible if you cover it under a personal property endorsement.

A similar endorsement is called personal property replacement cost. A standard homeowner’s policy pays the actual cash value for any fire damaged. Because of depreciation, however, actual cash value is always significantly less than the replacement cost. With a personal property replacement cost endorsement, a homeowner can remedy this issue by receiving the actual cost to replace any item that is lost or damaged in a fire, such as furniture, electronics, etc. regardless of the item’s value at the time of the loss.

Another endorsement you may want in case of fire would cover code upgrades. These are changes to building laws that may require you to add new features to your home that weren’t required when the home was originally built. If you don’t have this endorsement, you would have to pay this difference out of your own pocket.

A good piece of advice for anyone who is purchasing a homeowner’s policy and is concerned about loss due to fire is to make a good record of the belongings in your home. Take a video camera and record the entire outside the house and then walk through the whole interior of the home. Along the way, identify all of your personal property and record it on tape. Open all of the closets and shoot inside your storage spaces as well. Take time to record what is in your sheds and outbuildings too. Insurance experts say that this is the best way to prepare yourself in the unlikely and devastating event that you should experience a fire in your home.

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