Fourth of July fireworks mishaps can cause home insurance rates to skyrocket

Your backyard Fourth of July celebration could go off with a bust – not a bang – if it results in fireworks-related injury or damage at your home.

Home insurance probably isn’t on your mind when you're preparing to set off sparklers or bottle rockets. But knowing what your home insurance policy covers could safeguard you in the event that a fire does cause damage or injury.

More fires are reported in the United States on the Fourth of July than on any other day, and fireworks account for more than half of those blazes, according to the National Fire Protection Association.

Fires at Fourth of July celebrations caused an estimated $38 million in property damage and about 30 injuries in 2009 (the most recent data available), the association says. An estimated 18,000 fireworks-related blazes were reported, including 1,300 structure fires and 400 vehicle fires.

home insurance fireworks Your home insurance policy probably doesn’t mention fireworks, but home and renter's policies cover damage from blazes caused by fireworks, says Loretta Worters, vice president of the Insurance Information Institute. However, since fireworks are illegal in many states, if your house catches fire because you've set off bottle rockets in your back yard, the insurer may not pay your claim. If you live in a state where fireworks are illegal, check to see whether your policy excludes fireworks-related coverage.

When mayhem strikes

If you’re lighting fireworks and they land on your roof, fly through your windows or spark a grass fire, structural damage to your property will be covered, says Mario Morales, manager of corporate underwriting for MetLife Auto & Home.

If you’re setting off fireworks and they get out of hand, spreading to your neighbor’s yard, shed or house, then your liability would kick in.

“You would be responsible, likely, if they’re able to identify you’re the one that set off fireworks. Then you could potentially be held legally liable for their damage,” Morales says.

Use of any fireworks is illegal in four states – Delaware, Massachusetts, New Jersey and New York – while many others only allow only those that sparkle. Many cities in Arizona, Kansas, Louisiana and Texas are not permitting the use of Fourth of July fireworks in 2011 because extreme drought has created ideal conditions for grass fires. Other cities, such as Knoxville, Tenn., and Allentown, Pa., have a standing ban on the use and sale of fireworks.

In the case of damage caused by your neighbor, your insurance company initially would pay, according to the National Association of Insurance Commissioners. But the company would pursue reimbursement from your neighbor’s insurer.

Worters says home insurance companies typically have what are called "subrogation" rights. Here's the definition: If the insurer pays the property owner for a loss, such as a house fire, and then discovers the loss was the fault of a third party, such as your neighbor, the insurance company may sue and recover those costs.

Morales says your neighbor’s insurance policy could exclude activities such as lighting fireworks. If so, your insurer would not seek reimbursement from your neighbor’s insurer to cover the loss.

The harm of fireworks

Property always can be replaced, but there’s the potential of serious injuries to your friends and family when fireworks go awry.

Even seemingly innocent sparklers can be as hot as 1,200 degrees, which can cause severe burns, according to the National Fire Protection Association. Don’t let kids (those ages 10 to 14 suffer the highest rates of fireworks-related injuries) pick up fireworks after they've lit up the sky because they still could be hot, experts say.

The main way to prevent fireworks-related damages is to attend a public display staged by professionals,according to experts. Still, some people can’t resist lighting up the sky in their driveways, streets and cul-de-sacs.

If your fireworks fun injures an innocent bystander or damages your property, it could trigger big changes in your home insurance. If you file a claim related to fireworks, that activity changes your risk profile and prompts a "very close look" from your insurer, Morales says. When your policy expires, your rates could rise or your policy may not be renewed, Morales says. MetLife couldn't provide estimates of how much premiums might rise, as that depends on an array of factors such as where you live.

In the case of injuries, personal liability typically protects you and your family from legal responsibility for negligence if someone is injured or someone else's property is damaged, Worters says. The monetary limits are outlined in your home insurance policy; additional coverage can be tacked on.

In addition, what’s known as “medical payments to others” in a homeowner's policy can protect you from medical expenses incurred by guests when they're on your property and are injured by fireworks. Worters says that unlike personal liability, legal responsibility does not have to be established for medical claims to be paid.

Keeping safe on the Fourth

If you plan on setting off fireworks at home, here are some safety tips from the U.S. Consumer Product Safety Commission:

• Light fireworks outdoors in a clear area away from houses or flammable materials such as dry leaves or grass.

• Make sure other people are out of range before lighting fireworks.

• Never ignite fireworks in a container.

• Keep a bucket of water nearby in case of fireworks emergencies.

• Do not relight or handle malfunctioning fireworks. Instead, soak them in water and throw them away.

• Do not place any part of your body over a firework while lighting it.

• Do not experiment with homemade fireworks.

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