Jayne, who is a new renter, is seeking to obtain a Renters Insurance. Jayne confesses that a lot of what she has heard about renters insurance is about personal property coverage. But she is not sure what is covered.

One of the items she is wondering is whether renters insurance provides coverage for fire. “Does renters insurance cover fire?” she asks.

There are several approaches to the answer to this question. Let’s dig into them and find out.

What Is Renters Insurance?

Renters insurance is a safety net for renters living in an apartment or a house. A typical renters insurance is an insurance policy that covers the renter or tenant, their personal goods, and potential liabilities that may occur on the property due to a covered peril.

Renters insurance also covers injuries to another person in your rented apartment or home.

Does Renters Insurance Coverage Include fire?

This is a great question.

Renters insurance has several different types of coverage, depending on what you need.

Does renters insurance cover fire? The answer is Yes!

Your renters insurance policy covers fire if the fire destroys your property or belongings or temporarily forces you out of your apartment.

If you are in possession of renters insurance, your insurance company will compensate you for your stolen or damaged items and, if covered, pay to put you up somewhere for some time.

It does not matter whether you negligently started the fire or if someone else started it. Fire is fire, and since it is a covered peril, you are protected unless you started it intentionally.

So, yes, renters insurance covers fire.

When Does Renters Insurance Cover Fire?

In a typical renters insurance policy, fire is one of the popular and most common covered perils. What it means is that you have coverage for property damage or loss – reimbursement – due to fire.

If by any chance, your policy does not name the covered perils, it is probably an “all-risk” policy.
This means that all perils, including fire, are included in the insurance policy, unless specifically excluded. In such a case, it means you are covered on “all risks” including fire damage, if it occurs.

Your renters insurance covers your belongings or personal property and does not include the actual apartment. The physical building is covered by the landlord’s insurance, which will pay for the damage and loss to the building.

For instance, when a fire occurs in your apartment, your insurer – through the renters insurance – will compensate you for the cost of your property in the building only. Your insurance company does not extend payment for damaged walls or structures. The landlord’s insurance covers those costs.

However, each type of coverage might respond differently to fire. Remember, each type of coverage has separate limits, which impact how you choose and use the insurance coverage.

What Costs Does Renters Insurance Cover?

In most renters insurance policies, there is a clause about coverage of replacement cost vs. actual cash value.

What this means is that, on the reimbursement, you get the replacement cost or the adequate amount to replace the damaged or lost property, and not the loss of its current depreciated value.

The “replacement cost contents” or a similar phrasing is a key clause that you should make sure to look out for.
Would you need the actual cash value of your 5-year old home theatre? Definitely no!

Fire Damage On Personal property

Renters insurance covers personal belongings or property when lost or damaged, including by fire. You will get a payout from your renters insurance company to replace lost or destroyed belongings.

However, your renters insurance covers any losses only up to your coverage limits. Check for your listed coverage limits for personal property on the policy declarations page.

Furthermore, when – after the fire – you file a claim for belongings and personal property, you will also pay a deductible. This is the agreed amount of money on your policy document that you pay on claim before the insurer picks up the rest.

Also, fire damage to your personal property must not originate in your own apartment for you to be covered. Your claim will be approved as long as fire damages your property.

It doesn’t matter what causes the fire, be it bushfires, or your neighbor’s cigarette or fireworks.

The same applies to your belongings. They must not be in your apartment for them to be eligible for a claim.

Coverage of personal property applies to all your belongings anywhere they are located.

For instance, if your car caught fire on the road and your suitcase with clothes and a laptop are inside the car, your renters insurance will reimburse your laptop, suitcase and contents of the suitcase. The car will be protected by your car insurance.

Fire Damage And Liability Coverage

Does your renters insurance policy cover fire liability?

Absolutely Yes!

Your renters insurance protects you from liability when the fire causes property damage or bodily injury to someone else (a third party). Liability coverage will cater for the individual’s medical expenses if the fire accidentally causes bodily injury or damages their property, as long as the fire is a proven accident.

However, the landlord is not covered. That is why you don’t list the landlord as an additional insured.
Similarly, if the fire is as a result of your negligence – for instance, when you left a candle unattended, while cooking or if you threw away a still-lit match – the landlord’s insurer may try to recover costs from you.

Depending on your cover limit, your renters insurance company may pay part of your liability for the fire, up to some legal costs.

Fire Damage and Loss-Of-Use Coverage

A fire can displace you or force you out of your home or apartment.

This is when loss-of-use coverage comes in to pay for the additional expenses that you incur when you are displaced from your home because of the fire, which is a covered peril.

For instance, you may need to put up in a hotel as your apartment is under repair due to the fire. Your renters insurance policy covers these new costs.

However, the coverage – such as the cost of a hotel – depends on your policy and the amount of loss-of-use coverage you purchased.

Renters insurance companies offer discounts when you install safety features in your apartment home. You will get a discount when you have such safety features as fire extinguisher, smoke detectors, carbon monoxide alarm or sprinkler system to help prevent fire damage.

Bottom Line

Renters insurance provides coverage for fire and damage from a number of different angles, because fire is usually a covered peril. Be on the lookout on all angles. Among the key terms you need to check are “replacement costs” and “all risks”. You can also make use of the discounts whenever you can.