What is Fire Insurance and what are its types?

Fire insurance is a form of insurance that protects against the possibility of fire in your home. It can be purchased by individuals or businesses to cover fire damage to their property as well as their personnels personal belongings. In the event of a fire, you want to make sure that you have the right kind of insurance to cover you and your family. There are different types of fire insurance that you may purchase depending on your risks and needs. Understanding these differences will help you make an informed decision when choosing the proper policy for your situation.

How Does Fire Insurance Work?

When you purchase fire insurance, you are purchasing coverage intended to protect your home and its contents from fire. This coverage can be purchased in the form of an insurance policy or as a bond. Both types of insurance require some basic information to purchase coverage. You will need to provide the policyholder with your address, the location of your home, and the information regarding contents and buildings at your address. This policy, once purchased, will cover you if a fire were to occur at your address. The coverage will begin when you sign the policy papers and is valid for a period of time set forth in the policy. Most policies provide some protection against claims beyond the coverage period.

Fire Insurance Coverage

Depending on the type of fire insurance you have, coverage may specify how much money the policyholder must pay if a fire occurs at your address. This money protection is known as coverage value. The amount of coverage you purchase will determine the amount of protection you have in the event of a fire. In some cases, the coverage option is limited by whether or not you have coverage on your secondary residence. If you have secondary residence coverage, the policy protects your primary residence as well as your secondary residence. In some cases, the policy only covers your primary residence. The coverage you have chosen will determine what happens to the proceeds if a fire does occur at your address. If the fire is found at your primary residence, the policy provides for a fund to be used for your comfort and well-being. This protection against having to pay money if a fire were to occur at your address will usually be referred to as floating insurance.

Basic Insurance

Basic insurance protects you and your home against all risks. It will pay out if a covered risk occurs and you are not able to take steps to protect yourself. In some cases, this coverage is referred to as full coverage insurance. Some insurance companies provide additional coverage for a fee. These options are meant for situations where you want the most protection possible, but do not need the most coverage.

Valued Insurance

Value insurance is insurance that provides you additional protection for a higher price. The coverage you purchase will determine the amount of coverage you have. The price of coverage will vary depending on the level of coverage you want, the amount of risk covered, and the premium you are required to pay. Some examples of value insurance include legal protection, home protection, and roadside assistance.

Average Insurance

Average insurance covers a range of risks and will pay out if a covered risk occurs, but you are not able to adequately protect yourself. In some cases, this coverage is referred to as minimum coverage insurance. The types of average insurance you choose will depend on the level of risk you are willing to accept.

Floating Insurance

Floating insurance is a special type of insurance that protects you and your home against claims. This insurance is often embedded in a contract you sign when you purchase other types of insurance. If a claim were to be made against your home, the insurance company would reimburse you for any damage caused by the claim. This kind of insurance is meant for people who are willing to take a chance with their home.