April 4, 2012

How Common Are House Fires?

A relative of mine currently has no home insurance.   If his home burns down then he's just out of luck.   He's taking a risk by not paying insurance.   Since he doesn't have a mortgage loan he can get away with not having insurance, plus he is in a very good financial situation so he could withstand a major loss.   While this is risky for him, going without insurance is saving him over $1000 a year.   For most people insurance is required for your mortgage so its not an option.   Even if your mortgage is paid off its usually not a good idea to go without insurance since the risk of a major loss would be a major financial hardship.

The major risk my relative faces is a house fire.  How common are home fires really?

[edit: I should point out that home owners insurance covers a variety of things other than fires.  Having homeowners insurance is almost always a smart move.  So don't follow my dads example ]

Image by dvs
I do not personally know a single person that has had their home burned down entirely.   I do know a couple people who have had minor home fires.  One person was smoking and had a small fire in his room and another relative had a kitchen fire.  In both cases the damage wasn't very significant.   But of course my own anecdotal evidences from my personal experience doesn't tell us much. 

The FEMA U.S. Fire Administration keeps stats on fires

In 2010 there were 362,100 residential fires in the USA.     In total the fires caused $6.65 billion in damages.

According to the Census there are 131 million housing units in the US and 114 million households.

As far as frequency you could figure that 0.317% of households experienced a fire in 2010.   Or we could say that 0.276% of housing units had a fire in the year.

With 362,100 fires and $6.65 billion in damages that means the average property damage from a fire was $18,365.

Clearly damages of $18,365 would not indicate the average fire causes the home to be destroyed or "burned to the ground".    Most of the fires are more more minor in nature and likely include many kitchen fires which result in smoke damage and minor structural damage.    Of course $18k is a large bill and most people can't afford that, but its much better than having to replace an entire home.

I could guesstimate the portion of homes that are actually burned to the ground.  First I'll take a wild guess that replacing a home costs $150,000 on average.  With $6.65 billion in damages and assuming that $150,000 replacement cost then the maximum number of homes that could be burned down totally would be about 44,333.   This is just a guess of course.   But I think it is reasonable to assume that only 10-20% of the homes that have a fire are totally ruined to the point of needing complete rebuilding.     If one in 10 fires results in a destroyed home then 0.03% of individual homes are destroyed by fire in a year.  That would mean that the chances of having a home burned down would be approximately 1 in 3000 ballpark.

Another way to look at the cost of fires is the average cost from fires per year per household.   Since theres $6.65 billion in damages if you average the cost over all the 114 million households the average cost per household is just $58.33.   If you're deciding if insurance is worth while then this is the figure I'd use compared to an average cost home.  If the average home costs about $170,000 then we're talking roughly 34¢ per $1000.   In other words a $200,000 home would have likely fire damage of 34 x 200 = $68.   I would estimate the fire insurance costs at roughly 34¢ per $1000 home value.    Keep in mind this is really just a ballpark estimate.  Insurance costs vary greatly from state to state based on local costs and varying likelihood of damages.

Of course the risks will vary based on several factors like age of the house, whether or not you smoke, how much you cook in the kitchen, etc.   The amount of property damage caused by a fire will be proportional to the value of the house as well.   It costs a lot more to replace a fancy kitchen in a  large house then to fix a few cabinets in a squalid apartment.  

What causes home fires?

FEMA's US Fire Administration site also has data on the causes of fires.   Here are the causes of residential fires ranked by %.

Cooking 46%
Heating  13%
Electrical Malfunction 7%
Other Unintentional, Careless 7%
Open Flame  5%
Intentional 4%
Equipment Malfunction 4%
Other Heat 4%
Appliances  2%
Smoking 2%
Exposure 2%
Natural 2%
Other Equipment 1%
Investigation with Arson Module 1%
Playing with Heat Source 1%

Looking through that list, there are not a lot of causes that you can easily avoid.  Not smoking and not intentionally burning down your own home only accounts for about 6% of the fires.

Cooking is by far the #1 cause of fires in the home.   That makes sense.   Who doesn't know of someone who's had a kitchen fire and probably had something on their stove catch flame once or twice?   Ok maybe I'm not a very good cook, but I think fires in the kitchen are not very uncommon and they can certainly turn into major fires.

Notice that smoking is the cause for just 2% of fires.   I would have guessed that number would be higher but only around 20-25% of adults smoke in the US.


  1. Home insurance covers other risks besides just fire. For instance, liability. The irony is that if you have enough assets to handle a fire loss, then you are more to lose if you get sued by someone injured on your property.

    The stats are very interesting. I am reminding everyone I know to put a fire extinguisher in their kitchen!

  2. SteveD, Thanks yes, thats a good point which I failed to cover. I'll make a note to explain there are other risks that I'm not discussing. I believe my dad has liability insurance through another source. He has several rentals and I know he has liability coverage because of them. However he would not be covered for damage to his home from theft, burst water pipes, vandalism, or any of the other various things homeowners insurance covers.


  3. Your probability of a fire of 1 in 3000 is calculated per year. Most people own their home for longer so you would need to add up that probability over the number of years the house is owned, which makes the probability much higher. Good article!

    1. you pay insurance every year for the likelihood of the house burning down that year, so the figure being cited is the relevant one

  4. As it stand right now, you have almost a zero chance of your house being completely destroyed. When you look at saving $1000 a year of home owners insurance; you have to look at all the other money you save from not purchasing insurance on other assets such as washers, dryers etc. Then look at the probability of all does items needing serious repair or replacement. We are more adverse to loss and that is why we feel we must purchase insurance.

  5. Take 30,000 dollars of lost opportunity cost @ 5% to understand what you really paid for the insurance.

    1. If you start with a $1000 premium that increases by 2% each year (inflation estimate), and sum it over 30 years you would have spent $40,568 on insurance and had $87,870 in opportunity cost (assuming 5% growth of investment).

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  7. Well, when it comes time for monthly exorbitant insurance payments, your relative is in luck because he won't have to pay one cent. He can set that money aside and use it for something productive, like buying another house if his is ruined. If his house is never destroyed, then he gets to keep his money. It's a win win.

    1. Hmmm not really. That may sound good if his house is destroyed at year 30 but not at year 2. Even at year 30 (if you take the 30 year opportunity cost calculated above) he still needs to find an additional 200k to rebuild. You're not going to get much of a house for less than 300k.

  8. I decided to cancel my insurance on my house and my cabin. I did this because of scriptures that tell me to trust totally on the Lord. Store up for yourselves treasures in heaven and other scriptures in the Bible make it clear that I can't go wrong by investing in Kingdom work. My premiums will from now on going into church planting and building. Doesn't need to make sense to this world because that's not where I'm going to spend eternity!

    1. Spend your saved, insurance money on your family,the book you read, or probably didn't read in it's entirety,was written by man, not "god", And the only life you get is the one you are living today, There is no proof that any other life is in your future.the real truth will set you free! Enjoy life each and every day, this is it! Your heaven and Hell are lived here on earth, One day at a time. Reality isn't always nice, But it's always real!

  9. We suffered a terrible house fire 11 months ago, undetermined electrical. The frame is still standing. We needed all new siding and windows, and the entire 100-year-old house has been gutted. It's a national historic home. Without insurance, I can't imagine what the option would have been. To lose 40 years of memories, family items, basically everything....has been heartbreaking. It's a very long process, and insurance has been a lifesaver. Our temporary housing is also covered, as well as the replacement value for our belongings, although it's mostly depreciated. In all, it's likely close to 3/4 million dollars or more. I have to say, I'm pro insurance.

  10. Having just suffered a house fire, you are forgetting that a fire is not just the structure, but all of the contents as well. So the loss is easily twice the value of the structure.

    Our house is going to be rebuild from the foundation up. It's no small loss. It's estimated 1 in 4 households will suffer a fire large enough to be reported to the fire department in their lifetime. There are 360,000 house fires a year. If we assume 4 people per house, that's 1.6 million people a year. In contrast- breastfeeding cancer effects a little over 300,000 people a year.

    So just because you don't think you know anyone who's house has burned down, doesn't mean there aren't an awful lot of us out there

    1. Sorry about your fire. That sucks.

      I do not think that contents of a house are easily twice the value of the structure normally. (unless you've got seriously over priced furniture and expensive 'stuff') The financial damage from fires would include the contents I'm assuming. But the property in the home is certainly worth considering and varies in value.

      I do not know anyone who's home has burned down. Thats a fact. Its also anecdotal so doesn't mean much.
      Nationally there are a lot of people who've had fires thats certainly true.

      The vast majority of those fires reported to fire departments are minimal/ moderate damage kitchen fires. I do know people who've had those.

      This article deals with the chances of having a significant fire in order to determine the value of buying homeowners insurance as far as fire coverage goes.

      I'm not sure what your reference to "breastfeeding cancer" is about but its likely a spell correct goof. I assume you meant breast cancer. Breast cancer kills about 40,000 people a year and about 2500 die in fires annually. Breast cancer is over 10x bigger problem.


  11. I dropped my home insurance years ago. I travel internationally and have found many places I could live VERY comfortable on my income. I thought about it for a long time and finally dropped it and will take my chances. No regrets here what so ever. I am another one that does not know of a person that has had a fire.

  12. hmm, can you explain the difference between these stats and those from https://www.nfpa.org/News-and-Research/Fire-statistics-and-reports/Fire-statistics/Fires-by-property-type/Residential/A-few-facts-at-the-household-level

    1. THey are presenting two sets of figures. The # of fires experienced and the # of fires REPORTED.
      The number of reported fires is significantly less. I assume they are basing this off of the idea that only about 1 in 20 of fires that occur are reported. They don't present evidence of that figure and I can't confirm or deny it.

      Personally and anecdotally I think the idea that we have 5 fires in our home in an average lifetime is drastically over stated.
      In my whole family I only know of one actual fire. But based on the # of people and ages of my family their estimation would predict that we should have seen 10-20 fires.
      How many of your friends have had fires in the past year? If you don't know of any then that also contradicts their estimation about the # of unreported fires. It doesn't seem to pass a common sense check.



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