June 28 is National Insurance Awareness Day. Is it a coincidence that less than a week later, we celebrate Independence Day with lots of explosives in untrained hands? Americans spent a record $945 million on fireworks in 2018, according to the American Pyrotechnics Association (APA). Perhaps it's time to brush up on your knowledge of fireworks safety and how potential damage or injury could be covered by your insurance policies.
For many Americans, the Fourth of July holiday means cookouts, family get-togethers, and a nighttime fireworks show. If you are putting on your own fireworks display for your family, friends and neighbors, your first thought should be about safety. Your second thought might well be about insurance.
In general, fireworks affect two different policies – your homeowner's insurance policy and your health insurance policy. Injuries to yourself or your family are going to be covered by your health care policy. Damages to property and injuries to others will be covered under separate sections of your homeowner's policy.
The medical payments section will cover injuries to other people caused by your actions – for example, if you are setting off fireworks with neighbors and one of their children is injured by an errant bottle rocket, their medical bills are covered under your policy.
The liability section handles the collective sources of damage, although the most obvious one is fire. It covers accidental damage to your own home, as well as damage to any other neighborhood homes – and for any resulting damage of spreading fires. Many areas in the West are banning fireworks by consumers because of extreme fire dangers caused by years of drought.
Lawsuits that are filed against you for fireworks-related issues are also covered under the liability section of your homeowner's policy, whether the issues are with medical treatment, property damage, or both. Coverage amounts will vary, depending on the amount of premium you want to pay. You will also want to check for exclusions in the coverage – for example, are sheds or outbuildings covered, or damage to landscaping?
If you have larger assets that need to be protected from legal actions, you may want to consider an umbrella policy. These policies can be written to handle most situations and cover damages into the seven-figure range – obviously, that will come at the cost of higher premiums. Remember that your insurance premiums could also depend on your credit score. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
Some situations will not be covered under any policy. Accidents are generally covered but intentional damage is not. Damage caused by your children playing with fireworks can be a gray area – often children under the age of twelve may be excused of their actions, but teenagers engaged in bottle rocket wars or similarly dangerous activities will be held responsible.
Also, remember that individual use of fireworks is illegal or restricted in certain states, counties or cities throughout the US. Currently, Massachusetts is the only state to ban all consumer fireworks. However, Illinois, Ohio, and Vermont allow the use of wire or wood stick sparklers and other novelty items, but ban larger fireworks such as bottle rockets, firecrackers, and skyrockets. Many other localities – especially cities and counties in the drought-ravaged western U.S. – also ban fireworks to prevent sparking brush fires. If fireworks are illegal in the area where you are using them, no policy will cover any damages that you may cause – so be sure and verify that you are always using fireworks legally.
Finally, policies will not cover business activity with fireworks, such as storing or selling them. If you are engaging in that business, you will need to consider a separate business-oriented policy.
The National Fire Protection Association (NFPA) says that July 4th registers the highest number of fire reports all year nationwide, and according to 2017 data from the Consumer Product Safety Commission, over 280 people per day in the U.S. require emergency room care in the month around July 4th from fireworks-related injuries.
Make sure that you and everyone handling fireworks are doing so in a safe manner, and you won't have to worry about fires and injuries. However, just in case an accident does occur, review your policy to make sure that you understand the situations for which you are covered.
Be safe, be insured, and enjoy your Fourth of July holiday!