A fire insurance could be bought as a part of property insurance or as a stand-alone policy. It offers compensation for the costs incurred in the replacement, repair or reconstruction of a property that was damaged due to fire. Since the estimation of loss from fire is unpredictable, this policy is issued with fixed value compensation as an upper limit set by the property insurance policy. The actual loss or the maximum amount agreed beforehand is paid as compensation when you file a claim for fire insurance.