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Be Prepared: Fire Safety and Insurance

Every year, the week including October 9th is National Fire Prevention Week. This recognizes the tragedy of the Great Chicago Fire of 1871. Prevention and education are key steps of fire safety, but in case of an emergency, it’s necessary to have the proper insurance coverage. 

Today, let's dive into homeowners, business, and restaurant insurance considerations when it comes to fires, as well as ways you can protect your business and practice fire safety and prevention each and every day. 

There are several differences between fire coverage in homeowners, business, and restaurant insurance policies, but one of the key considerations across all policies is whether you want to pay for actual cash value coverage or replacement cost coverage. Actual cash value coverage takes into account reductions of value that occur over time. When an item is damaged, the policy will only cover the current cost of the asset. This is often much less than the cost to replace the item. Replacement cost coverage will cover the entire cost of replacing whatever item is damaged. Replacement cost coverage premiums are often more expensive than actual cash value ones, but the settlements are usually larger and more comprehensive. With that in mind, we can examine the differences in fire coverage between homeowners, businesses, and restaurant insurance policies. 

Homeowners Policies

Most homeowner's policies cover damage to your home and your property up to a certain limit and are divided into three categories: dwelling coverage, detached structures, and personal property. Dwelling coverage protects the actual home, and in most cases will cover the cost of repairs and the costs of living away from your home if it becomes uninhabitable while being rebuilt. Detached structures are those that are present on your property, but not attached to your home, like sheds, garages, and fences. Finally, the personal property portion of your coverage covers any belongings that may be damaged by fire, sometimes including landscaping. 

One separate consideration when reviewing your homeowner insurance’s fire policy is your wildfire coverage. Depending on where you live, your coverage may be limited or not available at all. Meet with your insurance agent to discuss your wildfire coverage, as well as your coverage limits. 

Business and Restaurant Policies

There are three parts of business insurance that relate to fire coverage. Your commercial property insurance will usually protect your building and other physical assets in case of a fire. You can also extend your policy to other detached structures, similar to homeowners insurance. When buying insurance for business, you also have to consider your general liability and business interruption insurance. General liability insurance will protect your business from any legal action a third party can take against you in case of an injury during an emergency. It will also cover the cost of any of their property that gets damaged or any medical expenses they may incur. A business interruption policy covers the costs you incur when you have to stop operating due to an emergency. This can cover loss of revenue, staff wages, due taxes, and in some cases even the cost of relocating your business. A basic “business owner’s policy” (BOP) often combines these three types of coverage and can be a great place to start for businesses that don’t need a complex policy. 

A restaurant's coverage often also includes general liability, commercial property, and business interruption insurance; the difference in policies comes from adjustments made to coverage based on the unique risks of the industry. Coverage at a restaurant may be different based on the higher risk profile, and the presence of fire suppression technology. 

The first step to recovering from a fire is to avoid having one in the first place. Prevention is key to avoiding emergencies, but in case a fire does break out in your home, business, or restaurant, it’s crucial to have the proper coverage. Meet with your insurance agent or provider to discuss the intricacies of your policy, and if it’s the right fit for you. 

Fire Prevention and Safety

While making sure you're properly covered by insurance in the event of an unforeseen fire accident or emergency, practicing fire safety can ultimately prevent the emergency all together. Here are some ways you can make your home, business, or restaurant safer from fires: 

1. Create and rehearse an escape plan - ensure that you know at least two ways out of every room in your home and business. If you are a business, make sure that your exits are clearly labeled. If you have small children at home, practice your escape plan with them, and make sure that they know not to hide from firefighters in case of an emergency. 

2. Protect important documents - Place important documents like birth certificates, social security cards, passports, insurance policies, and business licenses in a water and fireproof safe. This will ensure that in case of an emergency, you still have access to key documents.

3. Fire Extinguishers - Know where your fire extinguishers are located and how to use them in case of an emergency. These can be the first line of defense against many types of fires in your home or business. 

4. Install and test smoke alarms - A properly installed smoke detector and alarm system can make all the difference in protecting your home, small business, or restaurant from a fire. Test your smoke detector frequently and replace the batteries at least once a year. 

5. Replace frayed wires - Frayed electrical wires can spark without notice, possibly causing devastating fires. Make sure you inspect exposed wiring often and replace it as needed. 

Want more information on Fire Prevention week? The National Fire Protection Association (NFPA) has a number of great resources on its website. Visit to learn more.

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