Definition of Fire insurance is a specialized form of insurance beyond property insurance, and is designed to cover the cost of replacement, reconstruction or repair beyond what is covered by the property insurance policy. Policies cover damage to the building itself, and may also cover damage to nearby structures, personal property and expenses associated with not being able to live in or use the property if it is damaged. Fire Insurance fire insurance Losses covered by fire insurance 1 - fire losses ( direct losses ) such as physical damage affecting the subject matter of insurance because of the smoke or flames 2 - fire losses ( indirect losses ) It is a total of damages caused by combat operations or extinguish a fire , such as 1 - losses resulting from the use of water to extinguish 2 - losses resulting from the demolition of barriers or walls 3 - losses resulting from the destruction of some of the neighboring homes 4 - losses resulting from the brea