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Is Fire Insurance the Same as Homeowners Insurance?

When most people look for the answer to this question it is because they have heard both terms when shopping for insurance. It is not uncommon to by homeowner’s insurance from a company named fire insurance exchange. Insurance agents will even give you details about a homeowners insurance policy and call a fire insurance policy. So is "fire insurance" and "homeowners insurance" the same thing?

The two are actually different but it depends on the context of the conversation. We will begin with how fire insurance got started then explain major differences between the two policy types. Knowing that the policies are different but the names may be intertwined will help when comparing quotes.

History of Fire Insurance

Insurance was started in a coffee house in London back in the late 1600's when merchants looking to set sail for the New World wanted protection against possible losses at sea. Many of the voyages were funded by venture capitalists at the time who wanted to get a return on their investment in the form of gold or tobacco from the New World. All this took place at a coffee house owned by Edward Lloyd who eventually founded Lloyd's of London. You may have heard about this company when you hear about famous people getting insurance for expensive items or body parts.

Fire Insurance HistorySoon after in 1666 a massive fire broke out and destroyed over 14,000 buildings including homes. The great fire of London was a wakeup call to homeowners who now found themselves homeless and without many belongings. So fire insurance was created by the same businessmen who started marine insurance. Fire insurance would cover homes and buildings against fires and that was about it.

Today's Homeowners Insurance Compared To Fire Insurance

Homeowners insurance companies today offer a multitude of different policies to protect your home. Whether you only want basic coverage to protect the structure against fire or a comprehensive policy with protection against theft, vandalism and identity theft you can find it. Most large insurers will offer a couple different options with regards to different levels of protection. Today you can get homeowners insurance policy that will cover almost everything except flood versus fire insurance of the past was very specific to only that peril.

The difference between fire insurance and homeowners insurance is blurred today because so many insurance agents still call home insurance fire insurance and vice versa. When shopping for fire insurance or home insurance you need to make sure that the coverage is what you are expecting. Because many agents want to provide a quote that is cheap they may not include all coverage that you desire. If you have jewelry or other collectibles you will need a floater to go along with the policy which is not usually included in a first quote.

Final Thoughts

Back in 1666 homeowners only cared about protecting their homes against fires because that was the most devastating loss they incurred. Today homeowners have many different threats to their home and life including tornadoes, hurricanes, hail, terrorism and many more so the policies have improved to protect against them. If you have a mortgage on your property the lender will require you to have a comprehensive policy that includes but not limited to fire protection.

It is still a good idea to ask questions to verify what coverage is included in each policy type. The names of policies are very confusing and each company has different levels of protection so be sure to ask questions.

What is not included in fire insurance?

  • Water damage from flooding
  • Personal injury
  • Earthquake
  • Mud slide
  • Sink holes
  • Maintenance issues with appliances

*Some of these perils can be protected with a separate policy or addition to your existing home fire insurance policy. Always ask your agent what is not covered on the policy as we are not the insurance company or claim to represent them.

 

 

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