Does Landlord Insurance Cover Fire Damage?

Laura Olson
Mar 1, 2023

You're a landlord renting out a home to tenants. One day, tragedy strikes—a kitchen fire ravages the property causing significant damage to the walls, floors, and furnishings.

As you frantically assess the damage and the cost of repairs, you may wonder: does my landlord insurance policy cover this fire? The answer is not necessarily a simple yes or no. It depends on the specific coverage details contained in your policy.

In this article, we'll look at one of the key components of landlord insurance—fire damage coverage—to help you better understand the protections included in your policy.

What Is Landlord Insurance?

First, let’s review the basics. Landlord insurance is for people who own property and rent it out instead of living in it. A homeowners insurance policy only covers owner-occupied homes, so you need landlord insurance to protect any rental property.

Since landlords face numerous risks, this type of insurance typically encompasses three main policies: property damage, loss of income, and liability coverage. By investing in landlord insurance, you can safeguard your finances and peace of mind.

Property Damage

This landlord policy covers the main building and other structures on the property, like fences, sheds, and garages. Property coverage will also extend to items that belong to the landlord, such as furniture, appliances, and fixtures. Some events covered by this policy include fire, smoke damage, lightning strikes, electricity problems, earth movement, and vandalism by tenants.

Loss of Rental Income

If your rental property becomes uninhabitable due to circumstances like a natural disaster or mold, your tenants will have to vacate the premises while repairs are made. This coverage is intended to provide rent reimbursement when your property is unoccupied because of covered events.

Liability

Your liability policy is intended to protect you from being sued by a third party if they are injured or their possessions are damaged on your property. For example, if your tenant trips and falls down a staircase that needs repair, breaking their arm as a result, they could sue you for negligence. Your liability policy is intended to cover any medical costs, legal fees, and lost income associated with the lawsuit for losses covered under the policy.

How Much is Landlord Insurance?



What Type of Fire Damage Does Landlord Insurance Cover?

The most common fire causes often covered by insurers include gas explosions, faulty wiring, electric malfunctions, lightning, or other natural disasters. These can inflict significant damage. In 2021, the destruction caused by fire cost up to $15 billion, according to this report from the National Fire Protection Association (NFPA).

That's why you want to be sure that your rental property is protected in the event of a fire. But what type of fire damage does landlord insurance cover?

Accidental Fire Damage

One type of fire damage typically covered by landlord insurance is that caused by accidental fires. This typically includes damage to the property's structure and any contents the landlord owns. Some policies will also cover the cost of alternative accommodation for tenants if the property is uninhabitable due to covered fire damage.

It's important to carefully check the details of your policy as there may be some exclusions. For example, some policies will not cover intentional damage caused by a deliberately lit fire or if the property was not adequately maintained, which resulted in a fire loss.

Wildfire Damage

Wildfires, which may be caused by lightning storms, camping fire accidents, or extremely dry and windy weather, are another leading cause of fire damage to property. In 2022, California alone endured more than 7,000 wildfires that damaged at least 876 structures including homes, offices, and retail buildings.

Like accidental fire coverage, wildfire coverage usually includes damage to both a property’s interior and exterior. It may also include coverage for business personal property damage and loss.

Even if your home is not directly damaged by fire, it may still suffer smoke damage from nearby wildfires and/or structure fires. If you live in a high-risk area, it’s important to make sure your landlord policy includes coverage for both fire and smoke perils.

What Does Fire Damage Coverage Include?

Fire damage coverage is intended to protect your rental property investment from the devastation caused by fire, which are often some of the most expensive repairs. It covers the cost to repair or replace your property and other potential financial losses resulting from a covered fire loss.

If the fire was caused by negligence on your part, you could be sued for damages. In that case, your policy may cover legal fees, medical expenses incurred by the injured party, and damage to their property.

Secondly, if repairs are necessary in the rental unit(s), tenants may have to move out temporarily while those repairs are completed. This situation can often be costly for them, especially if multiple tenants are involved.

Landlord insurance does not typically cover a tenant's personal belongings or temporary living arrangements. However, in this situation, you (the landlord) could potentially be responsible for paying these costs if found liable for the fire.

Fire damage coverage not only provides reimbursement for lost rental income, it also puts you back at pre-fire standards by covering the cost to upgrade your property to new building codes (should it be required) for covered losses.

Fire damage coverage does not apply to the tenant's property, medical fees, or legal expenses if they caused the fire. For example, suppose the tenant started an accidental kitchen fire while cooking. In this case, your policy maycover damages up to its limit, but it will not cover any of the tenant's personal property that got ruined.

Tips for Protecting a Rental Property from Fire Damage

It only takes a spark to start a fire that can cause massive damage if not contained. You want to have safety measures in place to help stop or control a fire. There are a few ways to protect your rental property from fire damage.

  • Install smoke detectors and fire alarms. These send an early warning signal when there is smoke or fire, allowing for the quick prevention of fire damage. It's essential to maintain these regularly and check they are always working.
  • Fire alarms are important, but sprinklers can help reduce the damage caused by a fire. Linking them to the fire alarm ensures they go off when a fire is detected, helping to put it out quickly.
  • Have an action plan and educate your tenants on what to do during a fire. This includes having marked fire exits, evacuation procedures, and emergency contacts they can use.
  • Provide fire extinguishers and fire blankets on the property, even if it is a single-family rental.
  • Maintain your property regularly. Repair fixtures and remove overhanging branches, debris, dried leaves, and other flammable materials.
  • Set rules about smoking and grilling, such as  having restricted areas for these activities.

How to Ensure You Have Enough Coverage in Case of a Fire at Your Property

It's essential you have enough insurance coverage in case of a fire at your property. Here are some tips to help ensure you have the proper coverage.

  • Make sure you have a comprehensive insurance policy that covers fire damage.
  • Review your policy annually and update it as needed so it still meets your needs.
  • Consider increasing your coverage if you've significantly improved your property or added valuable items.
  • Keep an up-to-date inventory of all the contents in your rental units so you can provide an accurate estimate of replacement costs to your insurer.
  • Make sure your tenants are aware of your insurance coverage and understand their responsibilities in the event of a fire.

When looking for landlord insurance with fire damage coverage, using an online insurance broker like Obie is a good option to consider.

Obie uses technology to streamline the insurance buying process for a rental property. You can get quotes from multiple insurers in just minutes without having to bother with paperwork or phone calls.

Plus, Obie is an independent broker and works with a variety of insurers, giving you more choice and flexibility when it comes to finding the right policy. You always get unbiased advice and recommendations.

Finally, Obie offers landlord insurance in all 50 states. No matter where your rental property is located, Obie can help you find the coverage you need.

Why not give Obie a try today? Getting started is easy. Simply enter your rental property address on the Obie website to receive an instant quote for landlord insurance.