How home fire insurance works

It’s great to have your own place. However, home ownership also comes with a responsibility to protect your home with home insurance. In fact, many mortgage lenders will require you to get it.

Perhaps the single greatest fear of any homeowner is experiencing a fire. The thought of losing treasures such as photographs, keepsakes, and heirlooms (and the widescreen TV, let’s be honest) can cause some serious anxiety.

Thankfully, fire insurance can protect your home and your belongings in the event of a catastrophe.


What is fire insurance?

In most cases, fire insurance is part of a standard home policy with contents insurance coverage (that’s the norm). The coverage typically pays to repair, replace or reconstruct your home in the event It’s damaged by fire (and to replace damaged or lost belongings, up to your policy’s limit). In most cases, the cause of an accidental fire doesn’t matter with this kind of coverage, but it can be caused by:

  1. Lightning strikes.
  2. Kitchen fires.
  3. Gas leaks.
  4. Faulty electrical wiring.
  5. Overturned candles.
  6. Faulty appliances.
  7. Fireworks gone wrong.

Just like other home insurance policies, filing a claim means paying your home insurance deductible and letting the insurance company pay for the rest of the damages up to the policy’s coverage limit.


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What does fire insurance cover?

As part of a home and contents insurance policy, fire insurance covers not just the cost to repair and rebuild your home, but everything inside of it as well (as a part of your larger home insurance policy). The goal is to provide restitution to place you back in the same position you were in prior to the fire.

Fire insurance is just one part of your insurance policy, with other types of coverage responding in the event of a theft, water damage, liability claim or any number of other perils that could damage your home or contents. Your policy also covers other buildings located on your property, such as a garden shed or a detached garage.

It’s worth noting that most home policies cover the more mundane causes of fire. Forest fires like the one that ravaged Fort McMurray would probably be considered a separate cause of damage altogether, so you might need separate insurance to cover natural disasters like that.

Your policy may also pay to put you and your family up in a hotel or rented property while your home is being repaired or rebuilt, along with any additional expenses you might incur because you are not living in your home (such as the cost of commuting, if you must live far from work or school). That’s often considered additional coverage but it helps a lot in a pinch.


Standalone fire insurance policy

A stand-alone fire insurance policy is an extremely limited type of insurance policy that only covers losses caused by fire. That means this type of policy provides no coverage for things like:

  • Water damage.
  • Burst pipes.
  • Vandalism.
  • Storm damage.
  • Personal liability.


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It’s often sold without any coverage for your contents, and if it is included, it would be the most basic type of coverage available. Even insurance for scheduled items would probably need to be purchased on top of standalone fire insurance.

Essentially, if fire causes damage in any way, this type of policy responds, including any subsequent water damage by the fire department or damage caused while fighting the fire. This coverage is ideal for people who have the financial means to rebuild or repair all but the most extreme damage to their property or for buildings that might be old or in a state of disrepair.

Most homeowners would benefit more from a well-rounded home insurance policy because damage can come from more than just fires. All-risk insurance coverage does this much better than standalone fire policies. The option is there if you want it, though.


Fire insurance as a part of a more comprehensive policy

All standard home and contents policies include fire insurance coverage. Individual policies may define the coverage differently or calculate how they pay fire insurance claims according to different formulas, but fire as a peril is always covered to a reasonable degree.

A more comprehensive home and contents policy insures against many more perils than fire. It will also cover water damage, vandalism, theft and many more things that can damage your home or its contents. Most comprehensive policies will also have more favourable payment terms than a standalone policy, including replacement cost, which will pay to repair or rebuild your home, even if that cost is higher than your policy limits.


How much does fire insurance cost?

There’s no set number for insurance costs, unfortunately. The cost of all home insurance in Ontario is based on many factors, including:

  • Replacement cost of the property.
  • Proximity to fire hydrants and fire halls.
  • Geographic region of the home.
  • Home security features.

The two biggest factors are the value of the building and how close it is to a fire hall, so always keep those in mind for your insurance policy.



You can also lower your fire insurance rate if your home checks certain boxes, including:

  1. Fire alarm systems.
  2. On-site fire extinguishers.
  3. Sprinkler System.
  4. Living close to a fire hydrant.
  5. Living close to a full-time fire department.


Fire-only insurance

A $300,000 home in Waterloo that is close to a fire hydrant and within five kilometers of a fire hall can probably be insured for fire only protection for between $200 and $400 annually. That same home in King City, far from hydrants and fire halls, could cost you between $600 and $900 per year.


All-risk insurance (including fire coverage)

There is a massive range in home insurance prices due to the differences in coverage offered by different insurers. The average Ontario homeowner insurance policy is about $1,200 per year. As you might expect, the range stretching above and below that average can be pretty wide. That same $300,000 home could cost $700 per year in an area with good fire protection, or $1,700 per year in a remote area.

Fire insurance is an integral part of every insurance policy! Be sure to talk to an insurance advisor about the type of insurance that’s right for you.


How do I get paid after a fire?

Following a loss, your insurer will send an adjuster to work with you and local contractors to determine how much it will cost to repair your home and replace any damaged property. In most cases this will be based on the home’s replacement cost and your contents coverage, but some policies will pay actual cash value instead, which depreciates the property due to wear and age (this is outlined in the policy at the outset—it’s not decided at the last minute).

In either case it is very important that you ensure your home for the correct and current value, so you won’t face any surprises following a loss. Talk to your insurance provider or read your policy closely to find out how your home would be restored.


Maintaining proper fire insurance on your home policy protects your family, your home, and your memories. Get an accurate 3-minute quote with us to see what fire insurance costs on your home.

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