Understanding Fireworks Insurance: Coverage and Risks

In the U.S., the use of fireworks captures both cultural enthusiasm and the potential for property damage. According to the National Fire Protection Association, fireworks caused an estimated 12,264 fires in 2021, affecting structures and vehicles. Despite this risk, fireworks sales soared to $2.2 billion in 2023, underscoring their popularity among consumers.

Insurance Coverage for Fireworks Damage

Buddy Parkhurst, a licensed insurance agent, explains how these incidents are managed from an insurance perspective. Standard homeowners insurance policies, like the HO-3, may cover fireworks-related damage, but state regulations on the legality of consumer fireworks play a crucial role. In states where fireworks are legal, damage claims usually stand unless negligence is proven. Conversely, in states like Massachusetts where fireworks are illegal, claims are often denied, and non-compliance can result in insurance cancellations.

When a neighbor's property incurs damage, their insurance typically covers the initial costs, possibly pursuing recoupment from the responsible party. Homeowners insurance tends to cover damage to other structures, such as sheds and fences, though fire-damaged landscaping coverage remains uncertain.

Impact on Auto Insurance and Premiums

Fireworks also pose a risk to vehicles, with over 300 car fires recorded in 2021. Comprehensive auto insurance commonly covers this damage after the deductible, regardless of the state's legality stance, provided the policyholder wasn't responsible for setting them off.

Policyholders should note that any claim, including for fireworks damage, can lead to increased premiums. Currently, full-coverage car insurance rates average over $2,000 annually, potentially rising after claims.

The U.S. Consumer Product Safety Commission reported several fatalities and thousands of injuries from fireworks within a single month in 2022, highlighting the personal and financial risks. Limited liability coverage under homeowners insurance, typically starting at $100,000, can apply in injury-related cases.

Submitting fireworks-related claims can impact a policyholder’s future insurance status, potentially affecting eligibility for new or renewed policies. Given these risks, professionals like Parkhurst endorse caution. They advise ensuring favorable conditions and using safety measures like fire extinguishers and hoses to mitigate potential damage.