Diwali fire hazards: how home insurance can protect your house and belongings
Diwali is a festival of lights, but diyas, firecrackers and flowing garments can also increase the risk of fire accidents. While most households prioritize health and life insurance, home insurance often gets overlooked. Yet a fire can damage not just the structure of a house but also furniture, electronics, appliances, clothing and valuables, leaving families with a substantial financial burden.
Home insurance can protect against such losses. It can cover damage caused by fire and smoke, lightning, storms, hail and other specified events. Add-on covers can provide protection against risks such as burglary, personal accidents, third-party liability and the cost of temporary accommodation if the house becomes uninhabitable.
Homeowners must understand how home insurance works, how much cover they need and what the policy excludes.
What does home insurance cover?
Home insurance typically has two components: the building and its contents. Homeowners can insure either or both, depending on their requirements. Building cover protects the structure, including walls, roofs, floors and permanent fixtures. Contents cover protects movable possessions such as furniture, electronics, appliances and clothing.
"To calculate the insured value of the building, you need to consider the reconstruction cost per square foot and multiply it by the built-up area of the house. Insurers can help homeowners estimate the applicable construction cost," said Gaurav Arora, chief of commercial lines & motor (underwriting & claims) at ICICI Lombard.
"For contents, homeowners should estimate the replacement cost or applicable insured value of their possessions and declare them under the relevant categories, such as electronics, appliances and clothing. The amount should reflect the value of the items being insured rather than an arbitrary figure," he added.
Expensive possessions need particular attention. Jewellery, fine art, antiques, collectibles and high-end electronics may require an add-on and may have sub-limits.
What happens if a fire breaks out?
Suppose a curtain catches fire on Diwali and the flames spread to the drawing room. The resulting damage to the building and insured contents will be covered under the fire section of the policy. Similarly, if a firecracker rocket enters the house or hits an air conditioner on the balcony and causes a fire, the resulting damage will be covered.
What if a short circuit causes the fire? Electrical damage can be treated differently from fire damage. Ashwini Dubey, business head - home insurance, Policybazaar, shares an example.
“If an air conditioner develops an electrical fault and catches fire, the policy may cover the resulting fire damage to the house and other insured belongings. However, the cost of repairing or replacing the faulty air conditioner itself may be excluded.”
"Some policies or add-ons may offer broader protection against electrical or mechanical breakdown," he added.
Is negligence covered?
Fire hazards can arise from the careless placement of diyas, candles or firecrackers during Diwali. Such carelessness or negligence in maintenance of the home, if found by a surveyor, can lead to claim rejection. Deliberate acts, wilful misconduct and specific exclusions will affect the claim for sure.
"Avoid fireworks in enclosed spaces such as your balcony," suggested Dubey.
"Homeowners should also follow basic precautions, such as keeping combustible materials away from diyas and not switching on electrical appliances in areas affected by flooding or fire until it is safe to do so," said Arora.
What if a fire breaks out at a neighbour's property and spreads to your home? The damage to your insured property will be covered.
"If the neighbour is found legally liable for causing the loss, third-party liability provisions and the principle of recovery may come into play," said Ramit Goyal, chief distribution officer, Generali Central Insurance. It means you do not have to wait for the neighbour's liability to be established before approaching your insurer. The insurer will admit your claim.
Which add-ons are worth considering?
A personal accident add-on could help in case of accidental injuries or death. One can add self and family members under this add-on. A third-party liability add-on can cover legal liability if a visitor suffers bodily injury or their property is damaged at your premises and you are legally responsible.
Consider a burglary add-on if you frequently travel or leave your house unoccupied. It covers the theft of insured contents.
If a fire severely damages your home and makes it uninhabitable, an alternative accommodation benefit may reimburse eligible expenses for temporary accommodation.
“We recently handled a case in which the insurer covered six months’ rent while the family stayed elsewhere during repairs to their home. Some insurers may provide this benefit for a longer period,” said Dubey.
If you own a property that you rent out and fire or flood makes it unfit for occupation, a loss-of-rent benefit may compensate for eligible rental income lost during the covered period.
Remember that temporary accommodation and loss-of-rent add-ons may have monetary or time limits. Read the add-on terms carefully before buying the policy.
Mistakes to avoid while buying home insurance
If the house is registered in a parent's name but the child buys the policy, the insurer should be informed of the arrangement when the policy is issued.
"Do not assume that paying the premium automatically guarantees a claim. If a child is paying the premium, the policy should be in the homeowner’s name, with the owner’s name reflected in the relevant government property documents at the time of purchase," said Dubey.
Homeowners should accurately disclose the fire-safety measures, such as fire extinguishers, alarms and other applicable safety systems, installed at the property. "Customers may benefit from additional premium discounting if they do so," said Arora.
Underinsurance is one of the most common mistakes homeowners make. "People often insure the structure but do not adequately assess the value of the contents. Both should be evaluated separately to ensure adequate protection. Jewellery, artwork and other expensive valuables need special attention because separate limits or conditions may apply," said Amit Goel, director, Equirus Raghnall Insurance Broking.
How to file a claim after a fire
Inform the insurer as soon as possible. A surveyor will come to the site to evaluate the extent of the damage.
"If emergency work is unavoidable, retain photographs, bills and other records of the damage and the work carried out. A fire brigade report, police report where applicable, purchase invoices, warranty documents, photographs and other records can help establish the nature of the incident, ownership of the damaged items and their value," said Chetan Vasudeva, senior vice president, Elephant.in, Alliance Insurance Brokers.
If the original bills are lost, alternative evidence may help substantiate the claim. "Email invoices, duplicate bills from retailers, manufacturer records, bank statements and credit-card transactions can help establish the purchase and value of the items," said Goyal.
Home insurance cannot prevent a fire, but the right policy can help protect a household from the financial consequences. Consider buying it before Diwali.