INSURANCE GUIDE

Most consumers go through life thinking that they have their automobile insurance there in case of theft, vandalism, or a collision.

auto insurance fire damageOne incident they might not think about is that of a fire.

Automobile fires happen – approximately one out of eight fires responded to by fire departments involve a highway vehicle fire.

Whether it is the act of vandalism or your vehicle is tragically swept up in a house or forest fire, having the right coverage is critical – and your current policy might not have the provisions for such an event.

A car fire can cause irreversible damage, which is why most vehicle fires result in a total loss of the car itself. If you have comprehensive coverage in your policy, you most likely will be covered, but it will depend on the amount in your policy and a few other factors.

What is Comprehensive and How Does it Cover Vehicle Fire Damage?

Unlike collision coverage, which only covers damage when your vehicle strikes something or is struck by something, comprehensive coverage picks up for those other unexpected disasters.

Comprehensive policies handle anything out of the realm of collision, but it is an entirely optional policy. When the state does not require it, many car owners do not add it on to the policy, which means you may not have it if you only opted for state minimums.

If, however, you have a lease or loan, your lender likely required this coverage, because they technically own the vehicle – and want it back in one piece if you choose to not pay for it.

Car Fire Examples Covered by a Typical Comprehensive Policy

If you do have comprehensive, then your vehicle fire would be covered in situations including:

  • Acts of Arson: Acts of arson, which are considered vandalism, are criminal acts. While you can hold the person who did the action responsible, your comprehensive insurance policy is also there to pay for damage to your vehicle.
  • Garage Fires: Garage fires can destroy entire homes along with any vehicles parked inside of them. You might assume that your homeowner’s insurance policy would cover your vehicle if it caught fire in the garage, but you would be incorrect. Instead, the only policy protecting you here is comprehensive. The only exception to this would be when a neighbor’s home catches fire that causes your garage to ignite as well. In this case, you might be able to file a claim with the other party’s homeowner’s insurance policy for compensation.
  • Engine Fires: Your vehicle might ignite itself due to electrical failure or engine combustion failure. While your car insurance does not typically cover a mechanical issue in the car, it will cover damage caused by fire from that issue. Mechanical failure is the leading cause of vehicle fires according to the U.S. Fire Administration’s National Fire Incident Reporting System for 2014 to 2016.

Does Auto Insurance Replace a Vehicle Destroyed in a Fire?

While you might have a comprehensive policy, you may not have enough coverage for your vehicle – and this is especially true if you have a newer car. Newer cars depreciate faster than used ones, which means you may owe more on that car than it is worth.

Insurance companies will pay to replace a total loss, but with a catch: they only pay up to the market value minus your applicable deductible. Therefore, you might owe $25,000, but if your insurer decides your car has a market value of only $20,000, the rest would be out of your pocket.

In most cases, car fires do result in a total loss. Fire damage, even if only to half of the car, is often enough for the insurance company to mark it as a loss.

Prepare for an Investigation

Fire damage claims are rare, but also red flagged for potential insurance fraud. You can expect a claim’s adjuster to scrutinize the fire, look at any applicable fire investigations and police reports, and make sure there was no issue of negligence or fraud involved in the fire.

The adjuster will not allow a claim payout until they have identified the cause of the fire either, which does take time. If you have rental car coverage on your policy, you may need to use this while you wait for the claim’s adjuster to determine your repair or replacement compensation.

Be Cautious about the Fine Print

Never assume that because you have comprehensive coverage your vehicle is covered. Some policies have specific exclusions for fires, especially if you have insured a vehicle in a forest fire-prone region. In this case, if you were forced to evacuate and leave a car behind, it might not be covered even by insurance if that exclusion exists.

Bottom Line: Read Your Policy and Make Sure You’re Covered

The best way to protect yourself is to read your policy. Make sure you are free of any fire exclusions, but also consider gap coverage if you have a high vehicle loan and lower market value. Likewise, review how much comprehensive coverage you have. Even if you have comprehensive, your insurance company only pays up to the maximum policy amount, which may be less than your vehicle’s value.

Knowing the coverage you have an adjusting it for what you might need in the future is the only way to protect yourself truly.