Understanding fire cover for your rental property

With bushfires affecting many communities, conversations about fire risk can feel especially close to home. Beyond seasonal events, fire remains a risk every property owner should be prepared for. Understanding what your landlord insurance covers, and where its limits lie, can help you make informed decisions about protecting your investment.

Insurance can be pretty literal, and that is a good thing, as it helps avoid confusion. So we will be clear from the get-go: when we say "fire damage", we are talking about damage from direct flames. That means actual fire, not heat-related issues like scorching, melting, soot, ash, or smoke. 

There is a handy glossary at the end of this article if there is any doubt about these and other related terms. 

When making a fire claim, insurers will focus on two key questions: "How did the fire start?" (cause and responsible party) and "What caused the damage?" (flames, smoke, melting, scorching). Your coverage will likely depend on the answers to these questions (refer to the product disclosure statement (PDS) for exact cover details).  

While bushfires are undeniably fierce, many fires in the home are caused by everyday issues like electrical faults, batteries, faulty or misused appliances, heaters, open fires, and yes, candles or cigarettes left unattended or in unsafe spots. To help you understand what is covered, we explore the different types of fire damage that are most seen… 

Tenant damage: accident or arson  

It is a nightmare situation and for many landlords, the nightmare continues when they realise their policy does not cover fire damage. If you are with another provider, it is essential to carefully review your PDS to confirm whether you are covered. 

At EBM RentCover, we offer landlords peace of mind by providing coverage for fires, whether accidental or deliberately caused by tenants. This sets us apart from some providers who may deem the risk too high. However, it is important to note that there is no coverage, either with EBM RentCover or any other provider, if the property owner is responsible for setting the fire. 

Lithium-ion batteries 

Lithium-ion batteries are a major cause of house fires. DFES in WA explains they are ‘sudden and intense’, often throwing battery cells several metres which can cause several fires simultaneously. A NSW inquest examining the dangers of lithium-ion batteries heard last December that they caused approximately six fires a week. 

Fires caused by lithium-ion batteries may be covered but it is not guaranteed and depends on the circumstances. If the fire is caused by tenant misuse or a genuine accident (many fires are caused by overcharging, for example), then the damage is generally covered. However, if the fire was caused by faulty workmanship (incorrect fitting of an EV charging station, for example), then the claim may not be successful, and you may have to seek restitution through the tradesperson.

Electrical fault 

Old wiring, overloaded circuits, and faulty appliances are common causes of electrical fires, and they can also pose serious safety risks. These fires are generally covered under standard fire damage, unless they are linked to building defects or faulty workmanship. In those cases, a landlord’s recourse may be through the electrician or builder involved. 

EBM RentCover includes cover for electrical fires in our standard policies. As with most claims, the cause will need to be confirmed, so an assessor may be appointed to determine how the fire started and what is covered. 

TIP: DIY repairs can be a false economy. Using unlicensed tradespeople, or doing the work yourself, might save money upfront but can void insurance and increase risk. Staying compliant with fire regulations and using qualified professionals for electrical work is a smart investment in both safety and cover. 

Unattended candle 

It is the story old as time, or at least the last 5,000 years or so since candles were first used. Leave them unattended and that flame can turn into a fire that destroys your property.  

The damage caused by the actual fire would likely be covered. Damage such as a scorch mark would not be covered if a flame was not present.

For EBM RentCover policyholders, it works like this: If a curtain or nearby papers on a desk caught fire because of the unattended candle flame, then you could submit a claim for general fire damage. However, if the wall was scorched, or dripping wax damaged the carpet (no flame directly involved in either), then you might submit a claim for tenant-damage, if the costs were greater than your excess amount.   

NOTE: The policy usually only covers the damaged area of floor coverings or floating floorboards – so you will not be covered for new flooring throughout the home if there was only a small area damaged.

All the circumstances will be taken into consideration at EBM RentCover when determining a claim, and the best option is to get in touch with us so we can chat things through.   

Bushfires 

When a bushfire strikes and homes are in its path, the results are devastating. Late last month (January) Federal Minister for Emergency Management, the Hon Kristy McBain reported that 400 homes had been lost in Victoria’s January fires alone. According to the Insurance Council of Australia (ICA), the insured losses from the Victorian bushfires have reached more than $200 million across 3,123 claims. An estimated 30 per cent of property claims were estimated to be total losses.  

Most landlord insurance policies will cover bushfire. Once again, landlords need to read their PDS and speak with their provider because the specific circumstances under which the rental could be covered could vary. Insurers may define ‘fire’ differently. 

At EBM RentCover, bushfire protection is offered in our standard policies but we may have a no cover period in place in relation to people living in certain areas taking out cover because a bushfire is imminent.  

TIP: The landlord’s policy does not cover the tenant’s possessions. The tenant may consider contents insurance to give them peace of mind.

What can landlords do? 

• Read the PDS carefully to understand exactly what damage is covered, and speak to one of our team if greater clarification is needed. Policies vary, and the detail matters. In short, EBM RentCover policies include cover for damage caused by fire, smoke or explosion, but not loss or damage caused by scorching, melting or charring, without flames. 

• Make sure the property is not under-insured. Be realistic about the replacement cost of the property and seek professional advice if you are unsure. 

• Ensure only professional tradespeople work at the property, particularly when it comes to electrical work. 

• Be bushfire ready, well in advance.   

• Do all you can to ensure the property is safe, including fire-safe. 

• Communicate with tenants to ensure they are fire-aware, have a plan in the event of a bushfire and taking all appropriate precautions around the home. 

A handy glossary of terms 

Arson – is the act of intentionally and maliciously destroying or damaging property through the use of fire  

Ash – is the powdery residue left after the burning of a substance 

Burning – means on fire 

Charring – means to burn or be burned partially so as to blacken the surface 

Explosion – is a rapid increase in volume and release of energy in an extreme manner, usually with the generation of high temperatures and the release of gases 

Fire – means the production of light and heat by combustion or burning; a fire must produce a spark, flame or glow 

Flame – is a hot glowing body of ignited gas that is generated by something on fire 

Melting – means the action or process of liquefying due to heat (e.g. a hot pot causes a laminate benchtop to melt, or an appliance overheats and its casing melts) 

Scorching – means damage caused by heat, not flames (e.g. holes burned in carpet by a cigarette or a piece of wood falling from the fireplace); to become marked or change colour because it is affected by too much heat 

Smoke – is the grey, black or white mixture of gas and very small pieces of carbon that is produced when something burns 

Soot – is a black powder composed mainly of carbon, produced when things like coal and wood is burned 

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.