Does home insurance cover fire damage?

The following are general definitions of what could be covered by home insurance and contents insurance policies, however, you’ll need to examine your specific coverage to find out exactly what you’re insured for.

Your home insurance policy may cover:

• Repairing or replacing buildings
• Temporary accommodation
• Demolition of damaged structures
• Clearing debris
• Fees for architects and surveyors

Your contents insurance policy may cover:

• Repairing or replacing possessions
• Moving or storage costs for unharmed belongings
• Clearing damaged items from premises

Most home or contents insurance policies won’t cover:

• Absence of flames (e.g. scorching, melting, and smoke-related damage)
• Non-adherence to fire safety regulations
• Intentional, negligent, or unlawful actions leading to fires

As a homeowner, ensuring that your home is protected against bushfire damage is also an important consideration from a financial standpoint. Insurers are clued in on the cost of repairing or rebuilding homes after a bushfire. 

For customers in hotspot areas, insurers will invariably offer policies that include coverage for bushfire-related damage. Ideally, you should check the kind of damage bushfires have previously caused in your area to get an idea of the extent of this expenditure. You can get home insurance policy quotes by providing your postcode and comparing the different policies to see which one offers the most adequate coverage for bushfire damage in your locale.

Consider doing some research on your home’s Bushfire Attack Level (BAL) Rating, which uses a scale to determine the risk of your property’s exposure to damage from the embers, heat, and flames from a bushfire. The BAL rating is determined by your local council and varies from BAL LOW, which indicates insignificant risk, to BAL FZ, which indicates that your property may be exposed to the fire front in addition to embers and heat. Depending on the rating, you may be required to pay a much higher insurance premium.

Is it actually “fire” damage?

Some insurers define fire damage specifically as damage caused by flames. For example, if your home is damaged by soot, ash, or heat from a bushfire, there’s a chance the insurer may not cover this damage.

Depending on the definition of "fire" in your policy, damage from scorching or melting may not be covered unless there are flames. It means damage caused by cigarette burns or a faulty heater will likely be excluded from coverage unless your home (or part of it) was marred by flames. Be sure to check the Product Disclosure Statement (PDS) to determine what’s covered and what isn’t.

Most home insurance policies cover both bushfires and housefires, meaning that the cost of damage caused by an electric fire is likely to be covered by your policy. However, the insurer may want to assess whether the electric fire was accidental before approving your claim. 

So, if you left an electric appliance unattended and that led to fire damaging your home or belongings, you're unlikely to be covered for the damage. Intentional or negligent fire damage is generally not covered by insurance policies. However, you may be covered for the damage if the fire was caused due to a faulty appliance. Your claim could still be rejected if your wiring wasn't up to current safety standards.

If a fire on a neighbouring property reaches your home and any part of your property or belongings catch fire, you're likely to be covered against the damage by your insurer. However, the fire doesn't need to reach your house to cause harm. 

The soot or ash from a fire on a neighbouring property might cause some damage to your home exteriors. Some home insurance policies allow you to claim for such damage if the fire that caused it was within a specified distance (generally a few metres) of your home.

If your home is affected by fire, you should file your fire damage insurance claim as soon as possible in order to speed up the process and, subsequently, any necessary rebuilding or renovations. You will likely need to consult your insurer before you start with any repairs, even those needed to avoid additional fire damage. 

You may want to consider taking photographs and collecting any repair receipts as these can be submitted as evidence along with your insurance provider’s fire and smoke damage insurance claims form. You may also need to submit a list itemising the damage caused to your home.

Upon receiving your claim, your insurance provider will ask an insurance adjuster to visit your home and verify the damage caused. This can involve gathering further information, including repair or rebuilding quotes from building contractors who are part of the insurer’s network. 

The adjuster may also help organise temporary repairs as necessary, and also initiate the claim calculation. If you are not satisfied with the claim amount offered by the adjuster, you can choose to corroborate their findings by asking a public adjuster to evaluate the damage and the cost of necessary repairs and rebuilding.

You will likely need to negotiate your claim with your home insurance provider, especially in case the public adjuster’s evaluation differs from that prepared by the insurer’s adjuster. 

Through this negotiation, you can confirm with the insurer the amount they’ll pay you depending on whether your insurance policy covers the total replacement cost of your home or an insured sum. Based on this negotiation, your insurer will either pay you a cash settlement or refer you to one of their network contractors for the repairs or rebuilding work. You may be able to get the work done by your preferred contractor if you’ve added this optional coverage to your home insurance policy.