Fire Department Service Clause

What Does Fire Department Service Clause Mean?

A fire department service clause is a provision in a fire insurance policy that stipulates the insurance company will reimburse the policyholder for the costs incurred in hiring fire department services. These services must be directly related to a fire on the insured property, and claim payments are made only after the expenses have been incurred. This clause is one part of how a policy handles fire damage, alongside the question of what homeowners insurance pays for after a fire.

Insuranceopedia Explains Fire Department Service Clause

A standard fire policy covers fires caused by specified risks, with extreme cases requiring additional premiums. To ensure profitability, the insurance company must take necessary precautions to minimize losses. This is the rationale behind the introduction of the fire department service clause.

This clause is especially important in two situations: remote areas and high-value properties. First, in many, if not all, remote areas, fire departments are not nearby, and in the event of a fire on the insured property, a fire department from a larger municipality must be called. Second, insured properties of significant value require the services of a fire department to minimize losses. Therefore, insurance companies introduced the fire department service clause to encourage policyholders to take appropriate action in the event of a fire. That same logic is why insurers point to basic home fire safety practices, which reduce the odds of a fire happening at all.