The most common form of home destruction is caused by fire. 14 The first fire insurance policy collected from many individuals by London merchant Nicholas Barbon (English economist, physician and financial speculator 7) and associates, after catastrophic fire devastation of approximately 13,000 buildings in London England (1666). In 1752, Benjamin Franklin organized the first United States fire insurance company, the Philadelphia Contributorship for the insurance of Houses from loss of fire. 1 Since, the establishment of the first U.S. based fire insurance policy, standard fire polices (“165-line-poicy”) in the United States provide coverage for few specifically named perils, attributed to the standard form (clause 3) include specific named perils, such as coverage for loss of rent, negligence, lost personal property, cost for temporary housing and other related costs due to a fire. 2 Purchasing renter’s insurance coverage may cover medical expenditures, result directly from a fire. 13 A comprehensive home insurance or fire insurance policy should reimburse the policy holder for living expenses (rent, clothing, food, etc) for a period of time, until the home is suitable for living. 14
Some standard property insurance policies include fire insurance in their coverage, while in other cases fire insurance may need to be purchased separately” (Best to contact your insurance agent if the information is not clearly known). A fire insurance policy may pay out replacement value or actual cash value. 3 Fire insurance premium rate policy based upon class rates and schedule rates. 1 In 2006, $11.3 billion in direct property loss from 1.6 million fires reported in the United States. 4
Premiums an insurance policy holder pays for fire insurance: Class rates or schedule rates. Class rate (uniform rate) applied to all risks in the same category inclusive for the type of occupancy, type of construction and type of community fire protection (“For example: if your town has a volunteer fire department, your premiums are likely to be higher than those in a community with a professional department.” 5) 1. Fire insurance for industrial and commercial properties usually determined by schedule rate (1): According to a physical inspection bad and good (credits) features are assessed. For example: “a certain commercial building may receive a credit because it is sprinklered, a debit because it is protected only by a volunteer fire department.” 6 Consideration for assessing a schedule rate: Construction, occupancy, exposure from neighboring buildings and internal fire protection. 1
Fire insurance value assessment based upon terms of actual cash value (ACV) or replacement cost: Advantages and disadvantages should be considered. “Actual cash value pays the amount of the property less depreciation.” Actual value fire insurance premium is less costly than replacement cost, does not cover the cost to replace a fire damaged equipment or cost to rebuild a new home. 4 The insurance company assesses the actual cash value after depreciation, based on their objective criteria including age of the property, category and subjective analysis by the insurance adjuster’s observation. Certainly the process may seem to be very arbitrary by the insurance policy holder.
Those who carry actual cash value fire insurance should have recent pictures of their property set aside in a safe place, evidence to show to the adjuster visual wear and tear, rather than arbitrary recognition. 8 When a business is underinsured, actual cash value will not be sufficient to replace equipment or facilities to re-open or replace personal property. The insurance policy holder would be responsible for added cost not covered by actual cash value insurance policy. 4 Replacement cost coverage for fire insurance pays the value of the property or equipment regardless of depreciation or appreciation. “Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 20% of the limit.” 9
Insurance companies offer discounts or credits on fire insurance policies based upon eligible requirements, such as alarm system that reports to a central station, up to ten percent discount (or more). Also, discounts offered for multi – policies provided by the same insurance company. 10 Sprinkler system throughout the property or home average 5 – 10 percent discount coverage. 11 A home or apartments proximity to a nearby fire station, sometimes yield a discount for insurance coverage premium and roof that less likely to burn quickly, than other types of roof material. 12 An insurance agent may ask questions could result lowering the premium rate: “When was the home built? What’s the square footage? How many claims have been filed over the past five years?” 10 Personally my home – owner’s insurance rate was discounted when I purchased a fire extinguisher for my kitchen.
Before signing a fire insurance policy or comprehensive policy that covers fire damage, make certain the insurance company is underwritten by a trusted name, financially able to pay claims (enough money in reserve) quickly or has good reputation. 13
Locating the best insurance policy for your property or business requires gathering quotes from several companies and comparing each offer. Referral Service to find the right fire insurance quotes (FireInsuranceeQuotes.com): http://www.fireinsuranceequotes.com/ and http://www.insuranceagents.com/fireinsurance.html (Compare Home Insurance Quotes including protection against fire).
1.) FIRE INSURANCE – http://www.history.com/encyclopedia.do?vendorId=FWNE.fw..fi034900.a
2.) The Standard Fire Insurance Form – http://insurance.families.com/blog/the-standard-fire-insurance-form
3.) What is Fire Insurance? – http://www.wisegeek.com/what-is-fire-insurance.htm
4.) Fire Insurance – http://businessinsure.about.com/od/propertyinsurance/a/fireins.htm
5.) Homeowners premiums fluctuate with community fire-fighting ability – http://www.insure.com/articles/homeinsurance/fire-protection.html
6.) schedule rating – http://www.ahtins.com/glossary/sss/s019.htm
7.) Nicholas Barbon – http://en.wikipedia.org/wiki/Nicholas_Barbon
8.) FreeInsuranceAdvice – http://www.freeinsuranceadvice.com/actual-cash-value
9.) Property Insurance – http://en.wikipedia.org/wiki/Fire_insurance
10.) Homeowner Insurance – Tips for Buying Homeowner Insurance – http://homebuying.about.com/od/hazardfireinsurance/qt/homeinsurance.htm
11.) Fire Sprinklers and Homeowner Insurance – http://www.nahb.org/generic.aspx?genericContentID=82243
12.) FIRE INSURANCE – http://hubpages.com/hub/FIRE-INSURANCE
13.) Do You Choose the Right Policy To Protect Your Home? – http://www.florida-homeowners-insurance-choices.com/fire-insurance.html
14.) Fire Insurance: Basics of What You Should Know – http://www.insuranceagents.com/fire-insurance.html