Fire and Allied Perils Coverage
The fire peril
Standard fire coverage responds to hostile fire - one that escapes its intended container - not to a friendly fire confined to where it was meant to burn. Coverage typically extends to lightning and explosion of natural, coal, or manufactured gas as allied perils, plus removal of property to protect it from imminent damage.
Key concepts include proximate cause (the dominant, effective cause of loss), friendly versus hostile fire, and the smoke and water damage that flows from a covered fire. Damage caused by the insured's own negligence is generally covered unless the policy excludes it; intentional acts are excluded.
Traps to watch
- Friendly fire: a scorched pot on a stove is not a fire loss; the resulting smoke may still be.
- Removal coverage is limited in time and amount and only applies where a covered peril threatens the property.
- Explosion of a boiler or pressure vessel may fall under equipment breakdown, not the fire form.
- Proximate cause questions: a windstorm knocks down a wall, which crushes inventory - the windstorm is the proximate cause.
Rule of thumb
Ask: did the fire escape its intended place? If yes, it is hostile and covered. If no, look for an allied peril or endorsement.
Worked example
A restaurant's deep fryer overheats, igniting a small flame inside the unit that is quickly extinguished, but smoke spreads through the kitchen. The flame is friendly and not a fire loss, but the smoke damage is generally covered as an allied peril under the extended coverage endorsement - a classic exam distinction.