What Will the Insurance Company Pay for After a Fire?


If you own your home, you likely have a home insurance policy. You can make a claim on that policy when your property is damaged by any of the perils covered, such as fire, theft, or extreme weather events. But the details of your policy make a big difference. There are deductibles, policy limits, special limits for certain belongings, and perils that the policy won’t cover.

What does insurance cover after a fire?

When you make a fire insurance claim, request your long-form policy and find out what you’re entitled to. Only your policy will have all the details you need. It will help you answer the question: what does fire insurance cover?

Rebuilding Costs

One of the highest costs you can face as a result of a fire is the cost of repairing your home. Modern homes burn much faster than they did in the past, and it can take as little as 3 minutes to engulf an entire room, largely due to the increase of synthetic materials in furniture. Fire and smoke damage is becoming more severe, and there is a higher chance you may have to rebuild your home from the ground up.

Fire insurance covers the costs of building materials and the cost of hiring a contractor. Most insurance policies have an inflation guard, which raises your coverage according to the annual inflation rate, but that might not be enough to keep up with building costs.

The rising price of commodities has had a significant impact on construction costs in 2021, and lumber shortages have also resulted in scheduling delays that can raise other costs as well, such as the cost of a rental while work is done on your home.

Replacing Belongings

An insurance claim should also help you replace belongings lost to a fire. How much it will provide depends on the kind of coverage you have. A policy that includes Guaranteed Replacement Coverage will provide funds equal to what it would cost to buy the same item today.

Actual Cash Value coverage provides considerably less, as it’s based on what you could sell the item for today, meaning deprecation has reduced its value. Depending on the type of coverage you have, your insurance policy may leave you short.

In addition to limits set out by your policy (and your premiums), special limits may also apply to certain valuables, such as jewelry or artwork.

Living Expenses While Your Home Is Repaired

Additional Living Expenses (ALEs) include:

  • The cost of a hotel or motel after a fire;
  • A short or long-term rental;
  • Food costs above your usual expenditure (from takeout, etc.);
  • Added transportation costs like gas on a longer commute.

These are the costs that come with having to find somewhere else to stay while you can’t use your home. You will have to keep up with costs like your home’s mortgage payments and property taxes, so help with additional expenses should be welcome.

These are the basics of your insurance policy. For further details, check your long-form policy and talk to an insurance lawyer.