How fire insurance works in Canada
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What is fire insurance?
Matt Hands, VP, Insurance
Fire insurance is a type of property insurance coverage that protects your home and your belongings from loss and damage as a result of fire. This form of coverage provides financial compensation to repair, replace, and rebuild your property after a fire.
Here are the key areas of coverage in a comprehensive home insurance policy:
Dwelling repairs and replacement
Contents insurance
Additional living expenses
Does home insurance cover fire?
Yes, standard home insurance policies already have fire coverage built-in, but if you are looking for extended coverage, talk to your insurance broker about your options. This can include extending your limits, opting for a standalone plan, or looking into specialty wildfire insurance (for high-risk homes).
What does fire insurance cover?
Every plan is different, so it's important to check your home insurance plan for all your fire-related risks. Here, we outline a few common coverages on most standard policies:
Lightning
If lightning strikes your home and causes a fire, your insurance can cover the damage to your property and belongings.
Smoke damage
Even if there’s no open flame, smoke from a nearby or contained fire can cause significant damage that your policy may cover.
Kitchen fires
Accidental fires from cooking mishaps, like grease fires or oven malfunctions, are commonly covered.
Gas leaks
If a fire results from an accidental gas leak, your home insurance may cover the resulting damage.
Electrical & appliance fires
Fires caused by faulty wiring, overloaded circuits, or malfunctioning appliances are typically included.
Fireplaces & candles
Accidental fires that start from using a fireplace or leaving a candle unattended are usually covered as well.
Does home insurance cover forest fires?
Across Canada, forest fire or wildfire coverage remains standard in home insurance policies. While we have seen high-risk areas in other jurisdictions – such as California – lose their protection, that has yet to happen here. Only time will tell as to how the state of climate change and natural disasters will impact the insurance industry in the long run.
In the meantime, wildfires continue to be a driving force in the inflation of home insurance across the country. As insurers need to pay out more losses due to these events, the funds are made up in premiums – from the pockets of homeowners. Below, we cover a list of wildfires and their insured losses in Canada from 2011 to 2024 (sourced from Morningstar DBRS and the Insurance Bureau of Canada):Â
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How much does fire insurance cost?
Because fire insurance is typically included in a home insurance policy, the cost of your coverage will depend on your overall home insurance premium. There is no one-size-fits-all price for this, but expect to pay between $1,000 and $2,500 per year for a comprehensive home insurance policy.
Ultimately, it depends on your home's risk factors – higher risk equals higher rates. These factors include your property's location, size, building materials, and overall rebuild value. And for factors related to fire specifically, here's what insurers look at:
Proximity from fire safety
Living close to a fire hydrant or fire station looks favourable to insurers. Aside from the safety factor, it can help benefit your insurance bill.
Fire protection devices
Having the right devices in place, such as smoke detectors and fire alarms, also look favourable to insurers – lower risk leads to lower premiums.
Electrical & wiring
Older wiring, outdated furnaces, or wood stoves may increase your premium. Consider upgrading home features for the safety and savings.
Dwelling materials
The materials of your physical home matter too. Fire-resistant materials, such as metal roofing and brick siding can reduce risk, leading to lower rates.
Risk of wildfire
For homes in high-risk wildfire hotspots – such as northwestern Alberta and northeastern British Columbia – expect to pay more for coverage.
Fire claims history
If you've made past claims for fire (or any claims at all), insurers see you as more high-risk for future claims – increasing your premium.
How can I lower the cost of fire insurance?
While you can't easily relocate to a lower-risk area, you can make simple upgrades to your home for a lower your premium, such as installing an approved smoke detector. And remember, since fire coverage is part of your home insurance policy, you can take steps to lower your premium—even if they’re not directly related to fire coverage. Beyond the fire-related precautions, try these additional strategies to save big:
Bundle insurance products – Consider getting your multiple coverage products (e.g auto, home, condo) from one provider. Insurers will thank you for your loyalty.
Opt in for a credit check – Insurers like to see financial responsibility, and a good score can help you save up to 30%. Soft pulls also won't impact your score negatively.
Get a group rate – Inquire about group rates, such as for professionals and alumni. You never know what discounts you could be eligible for until you ask.
What doesn't fire insurance cover?
While it's clear that fire insurance covers loss and damage from fire, there are still limitations to this. Here are some common exclusions – be sure to double-check your policy for the exact terms:
Arson
If the fire was set intentionally by the homeowner (or someone acting on behalf), the coverage won't pay out.
Negligence
Faulty electrical wiring, if deemed preventable through maintenance, could also lead to a denied claim.
War & nuclear
Damage caused by acts of war, terrorism, or nuclear explosions is generally excluded from coverage.
Vacant property
Without vacant home insurance, an insurer may refuse coverage for damages caused by fire, vandalism, or other hazards.
Belongings (exceeding limits)
Most policies have a cap on personal property coverage. High-value items (e.g. jewelry, collectibles) may require additional coverage.
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