Does home insurance cover fire and smoke damage?

This is general information, not insurance advice. Policies differ. Your insurer or broker can confirm what yours covers.

The short answer

Fire is the peril that home insurance was invented for, and it is covered by every standard home, condo and tenant policy in Canada, whether the policy is comprehensive, broad or named-perils. Smoke damage from a sudden, accidental fire is covered as well, including smoke from a fire in a neighbour’s property.

What a fire claim usually includes

The building

Repair or rebuilding of the house and attached structures, up to the dwelling limit. This includes:

• Emergency work: board-up, tarping, temporary heat, water extraction
• Demolition and debris removal
• Cleaning of soot and smoke from the structure
• Reconstruction

Detached garages, sheds and fences are usually covered under a separate limit.

Contents

Your belongings, up to the contents limit:

• Cleaning and deodorising of items that can be restored
• Packing, storage and return
• Replacement of items that cannot be restored

Some categories have special lower limits: jewellery, watches, cash, collectibles, bicycles and similar. Items scheduled separately are covered to their scheduled value.

Additional living expenses

The extra cost of living elsewhere while the home is unfit to live in: accommodation, increased food costs, laundry, extra travel and storage. See additional living expenses explained.

Water damage from firefighting

Covered as part of the fire loss.

Other items

Depending on the policy: spoiled food, damage to trees and landscaping up to a limit, fire department charges where they apply, and lock replacement.

Smoke without flames

Smoke damage is covered when it results from a sudden and accidental event:

• A fire in your home, however small
• A fire next door or in another unit
• A furnace or boiler puff back
• A burned pot on the stove

Smoke that built up gradually is treated differently. Staining from years of cigarette smoke, candles or a fireplace that has always smoked is wear, not an insured loss. Smoke from agricultural or industrial operations is commonly excluded.

Smoke from a distant wildfire that leaves residue in the home is generally an insured smoke loss, though the cleaning may cost less than the deductible.

How you are paid

Replacement cost. The cost of repairing or replacing with materials of like kind and quality, without deduction for age. Most policies provide this on the building, and many on contents, usually on condition that you actually repair or replace.

Actual cash value. Replacement cost less depreciation. Many policies pay this first and release the difference when the work is done or the item is bought.

Guaranteed replacement cost. An option on the building that pays to rebuild even if the cost exceeds the limit, provided conditions are met, typically that the home was insured to the insurer’s valuation and that you rebuild on the same site.

Deductible. Your share, deducted from the payment.

Limits that catch people out

• The dwelling limit is too low. Building costs have risen. If the limit is below the cost to rebuild and you have no guaranteed replacement cost, you carry the gap.
• No by-law coverage. Rebuilt areas must meet current codes. The extra cost is covered only if the policy includes building code or by-law coverage.
• Contents limit. Cleaning and storage draw on it as well as replacement.
• Special limits on valuables.
• Living expenses limit on a long rebuild.
• Home business property, which usually has a small limit unless added.

What is not covered

• Fires set deliberately by or at the direction of an insured person
• Vacancy. Coverage is commonly restricted after a home has been vacant for a set period, often 30 consecutive days. Tell your insurer before a home becomes vacant.
• Misrepresentation, for example an undisclosed wood stove, rental use or business activity
• Illegal activity on the premises, under some policies
• Wear and gradual damage
• The cost of upgrades beyond what was there

Insurers investigate the cause of fires as a matter of routine. An investigation is not an accusation.

Tenants

Your landlord’s policy covers the building, not your belongings or your living costs. A tenant policy covers both, and it also covers your liability if a fire you caused damages the building or other units. That liability cover is the part people overlook, and it can be the largest exposure a tenant has.

Condo owners

The corporation insures the building and the units to the standard unit definition. Your unit owner policy covers improvements, contents, living expenses, the corporation’s deductible if it is charged to you, and liability.

Landlords

A rented dwelling needs a landlord policy. It can include loss of rental income while the unit cannot be occupied after an insured loss. The tenant’s belongings are the tenant’s to insure.

What to do after a fire

1. Make sure everyone is safe and wait for the fire department to release the property.
2. Call your insurer or broker the same day. Ask about an advance for immediate expenses.
3. Secure the building. Policies expect you to prevent further damage.
4. Photograph everything before it is moved.
5. Do not throw anything out until it has been listed and the adjuster agrees.
6. Keep every receipt.
7. Start a contents list. See home inventory for insurance.
8. Get the scope of repairs in writing.

More detail: what to do after a house fire.

Will my premium go up?

It may. Insurers take claims history into account, and a fire claim is significant. The effect depends on the insurer, the cause and your history. A fire that was clearly not your fault, such as one that spread from a neighbour’s house, may be viewed differently. Ask your broker.

If you disagree with the insurer

Ask for reasons in writing, use the insurer’s complaint process, and then the General Insurance OmbudService, which is free. Disputes over the value of a loss can go to appraisal under Ontario’s Insurance Act. Time limits apply to legal action and can be as short as one year, so get advice early.

More: fire damage restoration.