Fire Insurance

Typically, fire insurance has and always will feature in the typical American homeowner policy. Ask any insurance agent and he will tell you that the sales and the claims for fire insurance are the highest at any point in time. So are the damages.

Why buy Fire Insurance?

As residential property extends into the wild land areas where neighborhoods and forests coexist, the threat of flames licking at things most cherished becomes real. After catastrophic fires like those that killed 24 people and destroyed more than 3,600 homes in Southern California, last year, insurance companies demand more risk-management practices from policyholders.

It may not make sense for insurance companies to have home owners trim hedges and trees a certain distance from structures, but it is necessary if "defensible space" – is to be created to protect your home. Unfortunately, no insurance rate discounts are being offered however, for policyholders who maintain approved defensible space.

Possible causes for fire

If dry seasons and wildfires were bad, holiday fires are even worse. They injure 2,000 individuals annually, causing more than $500 million in property damage according to the United States Fire Administration.

Candle fires are more common around the holidays and peak on Christmas Day causing almost twice as many home fires in December as in an average month. In addition, about 400 fires are caused annually by improper care of Christmas trees resulting in 10 deaths, 80 injuries and $15 million in property damage. So how do you mitigate the risk? By taking a fire insurance policy, of course.

How does it work?

The first step involves fire-safety inspections of homes especially in high-risk Western areas. Reports are issued on how to increase the safety of individual homes. Homeowners are given timeframes of 18 to 24 months to meet the recommendations, and compliance failure means that the chances of non-renewal of homeowners insurance policies will be high.

It is mandatory in most states to have sprinklers inside homes especially in neighborhoods where there are no fire hydrants. If you have sprinklers in and around your home, you may be eligible for discounts. A 5 percent discount is offered to those with sprinklers in part of their homes and a 10 percent discount is offered for those with sprinklers through their whole homes. This is good news for those who might be paying higher rates to live in scenic but more fire-prone urban-interface areas.

Some states have ordinances requiring sprinklers in areas where the city does not provide water such as southwest of the Stewart Indian School and up Old Clear Creek Canyon in Colorado. Homes in areas that don't have city-supplied water, that don't have city- supplied fire hydrants are all required to have sprinklers.

Things to note

Keep in mind the fact that while Fire Insurance policies cover fires that start off on their own cases of arson are not included in them especially if the fires have been set by the insured person. Like other perils, fires also start off unannounced. Make sure you know your fire insurance policy thoroughly or contact your insurance agent to find out what you are entitled to in case of such eventualities.

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