4 Facts About Fire Damage Coverage

12/16/2021 (Permalink)

Fire damage in a Lochwood, TX home.

Fire Damage Coverage

Fire damage is a covered peril under most insurance policies. If you lease a portion of a building for residential or commercial purposes in Lochwood, TX, it is important to know how much liability coverage you have, and its limits.

1. "Fire Legal" Is Equivalent To "Damages To Premises Rented To You"

"Fire legal" was the term used to describe liability coverage in the 1986 commercial general policy. In 1998, this portion of a commercial policy became known as "damages to premises rented to you." Liability coverage applies if the named insured causes a fire, and is usually an exception to policy exclusions.

2. A Lease Contract Can Cancel Out Liability Coverage

Liability coverage will not apply if a lease agreement states that a tenant accepts full responsibility for fire damage. This is called contractual liability, and a modification of lease terms will be necessary to restore coverage.

3. Limits Should Correspond To a Policyholder's Stake

The limits of liability coverage should reflect the value of the portion of a structure in the care, custody, and control of the named insured. If it does not, the tenant is underinsured. Limits on these policies are usually $100,000 or less, but can be increased.

4. This Coverage Only Applies to Fires Caused by the Policyholder

Fire liability coverage only applies to fires for which the named insured is at fault. This coverage does not apply to other types of damage or no-fault fires. Other types of coverage are needed to offset these damages and the cost of fire damage restoration.

Policyholders should be aware of the extent and implications of their insurance coverage. Tenants should consult with an insurance agent or risk advisor to ensure that they have a sufficient amount of liability coverage for fire damage and smoke damage to the portion of a structure in their care, custody, and control.