Need to know
- Policyholders are normally protected against bushfires but other heat-related fire damage is often not covered by home insurance
- There is a standard definition across insurers for flood cover but there is no standardised definition for fire insurance
- Many policies include only little cover for fire damage to your outdoor furniture and garden
Fire insurance is included in all home and contents insurance policies, but what does it actually mean? It turns out that what you're covered for is defined in many different ways.
"Insurance policies are complex, with considerable variation in terms and conditions. In 2012, the federal government introduced a standard definition for 'flood' after many people found out they weren't insured following floods in 2010–2011," says Bea Sherwood, CHOICE Senior Policy and Campaigns Advisor.
"Flood now means the same thing in every insurance policy, but we can't say the same thing for other natural disasters like fires."
The lack of standardised terms for fire insurance among insurers means claims can be open to interpretation – which could end up giving you a nasty shock.
CHOICE is campaigning for better cover when it comes to fire insurance, and we've already seen some positive changes: "We need to get ahead of this issue and introduce standard definitions for all natural disasters, including fire. People should feel safe knowing they'll be covered if the worst happens," says Sherwood.
"In October 2022, the federal government announced that it will develop standard definitions for certain natural hazards in insurance contracts. This is a welcome development and we look forward to seeing it come to fruition."
Fire insurance definition traps: Fire without a flame
Many home insurance policies don't cover you for scorching and melting if there is no flame. That means you're not covered for things like a cigarette burn on the sofa or if a heater topples and damages the carpet.
What makes this even more complicated is that every insurer phrases 'fire cover' differently. For example, under fire insurance:
- GIO, AAMI, Apia and Suncorp don't cover you for arcing, scorching, melting or cigarette burns unless the fire spreads
- Youi doesn't cover glowing, heat, smouldering, scorching or melting where there is no flame
- RAA doesn't cover scorching or heat where there is no fire
- NRMA doesn't cover scorching or melting where there is no flame.
And there are many insurers with product disclosure statements that aren't clear, so you don't know if you're covered for fire-related damage if there wasn't an actual flame.
While cheaper insurance policies don't tend to cover fire or heat damage without a flame, the more expensive accidental damage policies often do. These include insurers such as:
- AHM
- Allianz
- Australian Seniors
- Bank of Melbourne
- BankSA
- Budget Direct
- Everyday Insurance
- Great Southern Bank
- Huddle Comprehensive
- Hume Bank
- ING
- NAB
- National Seniors
- RACT
- Real Insurance
- Qantas
- St.George
- TIO
- Virgin Money
- Westpac.
Fire insurance exclusions to look out for
- No cover for loss/damage to heat-resistant items (if it ignites) or no cover of an item that is designed to be exposed to heat; this means if your heater or dryer ignites, it's not covered.
- No cover for loss/damage to floor coverings damaged by open fire, combustion heater or stove.
- No cover for items intended to have fire in them, if fire damage is limited to those items.
- No cover for loss/damage caused by heat, ash, soot or smoke from a fireplace or fire pit.
Fire insurance cover gaps
While your house is usually covered in the event of a bushfire, the cover for your garden and outdoor furniture can be very limited.
Cover for your garden
While no policy excludes fire from garden cover, many policies do not cover gardens at all and the ones that do are unlikely to cover the full restoration of a manicured and carefully tended garden after a fire. Cover starts at $500 overall and goes up to $5000, and may be limited to $200 per garden bed, plant, hedge, shrub or tree.
Contents cover in the open air
It's also very important to look at the amount covered in the fire cover of your home and contents insurance policy, especially if you have expensive outdoor furniture, a barbecue or an above-ground pool.
Fire cover starts from $1000 overall up to the full contents sum insured. And some policies have sub limits per item or for events such as theft. However, with some policies you can buy optional extra cover.
Confusingly, instead of clearly excluding fire cover, some policies instead specify a list of insured events for contents in the open air that does not include fire.
Progress since 2020
CHOICE investigated the cover for fire in home and contents insurance policies in the wake of the 2019/2020 bushfires and found that 70% of the policies we analysed contained "confusing, unfair or unclear" fire insurance definitions. Some policies excluded damage from "heat, soot, smoke or ash", others set unfair limits on the distance of a fire from a property (such as 10 meters), and some failed to adequately define "fire" at all.
The CHOICE campaign on behalf of 47,000 supporters won commitments from all Australian insurers to make their fire definitions fairer, and as a result of this, insurance policies now include better cover for bushfires.
We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking at CHOICE.
Stock images:Getty, unless otherwise stated.
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FAQs
Types of fires not covered by insurance
Insurance companies won't pay for damage caused by an improperly cleaned chimney and other types of homeowner neglect. For example, if you don't clean your dryer vents regularly and the built-up lint causes a fire, the insurance company won't pay for repairs.
Does home contents insurance cover fire? ›
Contents insurance protects against the cost of repairing or replacing your household goods and personal belongings when they're in your home. You'll be covered if they're stolen, or damaged by events such as fire, flood and storm.
Does homeowners insurance cover everything in a fire? ›
Homeowners insurance policies will usually cover the most common types of fires, including electrical wires, cooking, candles, your fireplace, heaters or another household item. Accidental fires or fires that are started by user error or mistakes will also likely be covered by your insurance policy.
What is included in the fire insurance policy? ›
Fire insurance policies provide payment for the loss of use of the property as a result of a fire. They also often provide additional living expenses if the fire caused uninhabitable conditions.
What does a standard fire policy cover? ›
Fire insurance is part of homeowners insurance and covers the cost of damages and losses caused by a fire. The coverage can pay to repair or rebuild your house and replace damaged personal property such as clothing, furniture, and appliances.
Which of the following is not covered by homeowners insurance? ›
Many things that aren't covered under your standard policy typically result from neglect and a failure to properly maintain the property. Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered.
Is home contents insurance worth it? ›
Whether you're a homeowner or a renter, contents insurance is one of the best ways to protect your belongings against loss or damage. But contents insurance doesn't just protect your things, contents cover comes with a range of additional benefits that protect the policy holder, which can come in handy for renters too.
How much contents insurance should I get? ›
How much contents insurance do I need? To estimate the value of your contents, include everything in your house that isn't part of its structure. Your contents insurance should cover the full cost of replacing your personal belongings. Don't forget about things like appliances, family heirlooms, jewellery, and clothes.
What is covered under home contents insurance? ›
This type of insurance covers everything you have in your home, from appliances and furniture to clothing and pots.
Is fire insurance worth it? ›
There is no getting around it — fire insurance is mandatory for California property owners who want to effectively manage their risk of loss. If you own or intend to acquire property in a high-risk zone for wildfires, insurance may be hard to come by. But if the worst happens, it is more than worth it.
Homeowners insurance covers your home and belongings against several types of hazards — including fire, smoke, theft, vandalism, wind, hail, tornadoes, and more. Meanwhile, fire insurance is a standalone policy that protects your home and belongings solely against fire and smoke damage.
How does insurance pay out after a fire? ›
In most instances, an adjuster will inspect the damage to your home and offer you a certain sum of money for repairs, based on the terms and limits of your homeowner's policy. The first check you get from your insurance company is often an advance against the total settlement amount, not the final payment.
What are the disadvantages of fire insurance? ›
Disadvantages of Fire Insurance
Cost: Premiums can be high, especially in fire-prone areas. This cost is a significant consideration for many. Complexity of Policies: Understanding policy details can be challenging. Terms and conditions, exclusions, and deductibles can be complex.
What is the average clause in a fire insurance policy? ›
An average clause in a fire insurance policy takes care of underinsurance situations. A fire insurance policy requires the insured to pay a proportion of the loss according to the average clause mentioned in the policy document if the assets are insured for less than their full value.
How do I prepare for fire insurance? ›
Insurance tips
- Contact your insurance agent for an annual checkup.
- Update your policy after home improvements.
- Ensure your policy includes key coverages like extended replacement cost, annual inflation adjustment, increased living expenses coverage, and building code coverage.
War, invasion, or war-like operations: Losses arising from acts of war, invasion, or war-like operations are not covered under the fire insurance policy. Missing or mislaid property: Losses related to property that is missing or misplaced are excluded from coverage.
Which losses are covered in fire insurance? ›
Fire insurance coverage includes mishaps caused due to accidental fire, lightning, implosion or explosion, etc. And also, man-made perils such as bursting of water tanks and pipelines or overflowing, leakages from water sprinkles, and so on.
What is one type of coverage that is always excluded from a property insurance policy fire theft flood earthquake? ›
Commonly excluded perils from home insurance policies include earthquakes, floods, sinkholes, certain types of water damage, wear and tear and intentional damage.
What is not covered insurance? ›
Key Takeaways. Health insurance typically covers most doctor and hospital visits, prescription drugs, wellness care, and medical devices. Most health insurance will not cover elective or cosmetic procedures, beauty treatments, off-label drug use, or brand-new technologies.
