Difference Between Fire Insurance and Life Insurance (With Table)

The kind of property insurance that compensates the losses and destructions created by fire is called fire insurance. By acquiring fire insurance along with property insurance is beneficial for property owners to get coverage for the expenses of repairing, rebuilding, and replacement costs, over the regular insurance policy limit.

Normally a fire insurance cannot cover the losses created by nuclear risks, wars, and other similar disasters. Fire insurance is a particular kind of insurance policy that may cover the damages and harm caused by a structure by a fire accident.

Even though home insurance may cover fire damage for a certain limit, a separate fire insurance is necessary to match the cost of the total losses created by a fire accident. When a regular insurance policy’s fire coverage is less extensive or no coverage, people may need separate fire insurance especially if they have valuable items that cannot be covered by regular insurance coverage alone.

The liability of an insurance company is restricted by the value of the policy and never based on the loss or damage of the property.

A typical fire insurance pays for the damage that prevents the owner to use the property further and also for the living cost because of a necessity due to the unhabitable conditions resultant of the fire. It comprises the personal property and nearby structures associated with the original property on which a person purchased the fire insurance.

It is vital for the policy owners to correctly document all the items of the property and its assets to simplify the damage assessment after the fire accident. A fire insurance policy contends extra coverage required against smoke as well as water damage created by the fire and is valid for one year.

The fire insurance policies that is nearing the expiry date can be renewed by the policy owner based on the terms of the original policy. A fire insurance policy can cover the damages created by electricity, an explosion of gas, lightning, bursting and overflowing of water pipes, and other similar natural disasters.

The limit of fire damage depends on the cause of the fire. The fire policy is reimbursing the holder of the fire insurance policy based on the cost of replacement as well as actual cash value based on damages. Two conditions should be considered while claiming a fire insurance. There should be real loss created by fire and the fire is caused by accidental means.