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Building hazard insurance has undergone many changes since its inception in Great Britain more than 300 years ago. Current versions include typical building fire insurance, which covers structures and their features or outbuildings. Building and personal property insurance, such as homeowner insurance, protects your structure and the personal items inside your home. Standard building fire insurance does not cover the contents of a building, unless the owner adds personal property coverage to the fire policy.
Standard fire policies and building insurance typically cover other "perils" in addition to fire. Both often cover windstorm, lightning and wind-driven rain damage. However, building and personal property insurance might cover "all perils," which protects you from all hazards except those specifically excluded by your policy language and limitations. The most common exclusion in "all risk" or "all perils" policies is flood damage.
A major difference between standard fire insurance and building with personal property coverage, including most homeowner policies, is liability protection. Standard fire insurance seldom provides liability coverage that would protect you if other people suffered injuries or property damage on your real estate. When you choose standard fire policies, you'll need to pay another premium for liability coverage. Conversely, most building and personal property policies include liability protection as an integral component of the policy.
Landlord and Homeowner Differences
Landlords need to purchase only standard fire insurance for their buildings, as they have no ownership interest in the personal property of their tenants. Landlords need personal property protection only if they store personal items at one or more of their rented buildings. However, typical building with personal property coverage, such as homeowner insurance, covers both your structure and your personal items.
Fire Policies and Renters Insurance
Standard fire policies, common choices for landlords, are vastly different from renters insurance. Because tenants have no ownership interest in their residence building, they need insure only their personal property. Standard building fire policies insure only structures. Conversely, renters need to protect just their personal items, from furniture to appliances to electronics to clothing. With no ownership interest in the real estate, they don't require building and personal property insurance. Renters should, if possible, learn whether their landlords have sufficient standard hazard coverage for the dwelling.
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