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Understanding Fire Damage Legal Liability Coverage

Fire Damage
Author: ServiceMaster Restore

Property damage after a fire can cost thousands of dollars. In 2021, local fire departments responded to approximately 1.35 million fires in the United States. These fires resulted in an estimated $15.9 billion in property loss, according to a report from the National Fire Protection Association (NFPA). On average, in 2021, a home structure fire was reported every 93 seconds somewhere in the United States. If you're concerned with fire damage legal liability issues, ServiceMaster Restore is here to provide important information regarding leases and other documents that can help.

What is Fire Damage Legal Liability?

The International Risk Management Institute (IRMI) states that fire damage legal liability coverage is: the coverage of a tenant's liability for damage by fire to the rented premises (including garages) the tenant occupies; such coverage is usually provided as an exception to policy exclusions applicable to property in the insured's care, custody, or control (CCC). Under the standard commercial general liability (CGL) policy, the fire legal liability of the named insured is covered subject to the "damage to premises rented to you" limit.

"Damage to Premises Rented to You" — one of the limits of liability prescribed by the standard commercial general liability (CGL) policy; it applies to damage by fire to premises rented to the insured and damage regardless of cause to premises (including contents) occupied by the insured for seven days or less. The basic limit is $100,000. (Source: IRMI)

For the business owner, fire damage legal liability is included under their commercial general liability policy. However, for the insurance policy to pay for fire-related damages, it must be proven that the insured party was directly at fault.

Who Needs Fire Damage Legal Liability?

Individuals or businesses renting space, whether residential or commercial, may be required to provide fire damage legal liability coverage regarding the specific rental area or possibly for the building's total value. The policy should cover the insured for liability due to any negligence that results in fire spreading and damaging another individual's or company's property.

What Does Fire Legal Liability Insurance Cover?

Fire legal liability insurance protects you from another significant financial loss after a devastating fire.

Potential Limitations A fire damage legal liability policy can have its limitations. These may include but are not limited to:

  • A monetary limit of either $50,000 or $100,000
  • Fire damage coverage only; no coverage for water damage or other related losses
  • Coverage for premises only; no coverage for contents
  • Coverage only if legal liability for the damage is the insured's responsibility

A variety of additional limitations may exist if the insured is a business rather than an individual. For example, an automotive company that suffers an explosion may not be covered if a spark ignited the fumes of a spray-painted vehicle. Moreover, if a business's lease directly states that the company or business owner is responsible for any damage to the property and premises, regardless of cause, the fire damage legal liability policy would not offer coverage. But your liability insurance will only pay for the damage if you directly caused the blaze. You'd be responsible for out-of-pocket damages unless you sought additional coverage in advance.

Every business and individual have specific needs regarding the policy coverage and the need for fire damage legal liability. To protect yourself from costly property damage, consider fire legal liability insurance. An experienced insurance agent can determine which coverage options suit your particular needs and situation. It's essential to explore your options and alternatives before a loss occurs to protect yourself in the event of a fire.

If a fire does damage your property, let the professionals at ServiceMaster Restore handle the clean-up and restoration process. Our local service businesses expertly remediate fire, smoke, and water damage for single rooms within a home or office and entire residential and commercial buildings. Call us at 1-800-RESPOND.

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