Loss Mitigation and Your Homeowners Insurance-Fire Insurance 101

Have you ever seen how much damage a simple household fire can wreck inside an otherwise healthy home? Something as uncomplicated as a splash of grease onto the counter or leaving a coffee pot too close to the bread bag has the potential to send your home into a blazing inferno, destroying everything you've spent years working for. Because it's that easy, fire insurance is a big part of your homeowners insurance.

The good news is that with a little effort and some safety savvy you can minimize the amount of damage that comes hand in hand with your average household fire. This is a process known as loss mitigation, and your homeowners insurance loves it! The end result is a two-fold benefit for you as a homeowner: Not only are your home and family protected from fire, you also get to save money on your annual premiums-a LOT of money.

For example, let's take a look at the effect that just buying and installing smoke detectors in your home can have on your homeowners or renters insurance. Most smoke detectors are available for less than $10 at your local hardware store, and because they make a great front line defense against fire because of their often excessive sensitivity to heat (as anyone who has ever accidentally boiled over their pasta onto the burner can vouch for) they greatly increase the chances that the fire will be able to be stopped before it spreads. Less chance of damage by fire equals less chance that you will have to file a homeowners claim, which in turn inspires your homeowners insurance to offer you a discount on your fire insurance as a reward for your safety savvy.

Of course, a smoke detector doesn't do you a whole lot of good if you live so far out that your neighbors can't hear it squealing and call the fire department for you. That's why your homeowners insurance providers also offer a discount (usually up to 15% or more) if you expend the time and energy to install an alarm system that connects your home directly to your local fire department. That means that as soon as your smoke detector starts going off an alert is sent to 911, who in turn can send help as quickly as possible. These systems aren't cheap, but between the amount of money you can save by protecting your home and the discount available on your fire insurance it usually balances itself out.

Finally, a sprinkler system capable of rapidly dousing a fire in the home can save you 15% or more on your fire insurance by minimizing the chances that the fire will spread far enough to cause vast quantities of damage. Statistics show that a household fire is one of the greatest dangers your home will face, so it makes sense to ensure that your home and your property are as protected as possible. You can do that with a good fire insurance policy, plenty of safety know-how and the good sense to realize that toasting marshmallows in your living room is almost always a bad idea.