Every year fireworks cause serious injuries and substantial property damage. According to the National Fire Protection Association (NFPA), fireworks start an average of 18,500 fires annually, including 1,300 structure fires, 300 vehicle fires, and 16,900 outside and other fires. These fires cause an average of three deaths, 40 civilian injuries, and $43 million in direct property damage.

Homeowners' insurance

Standard homeowners' insurance policies include coverage for fires. If someone sets off fireworks that hit your home, you would be covered. Coverage amounts will vary, depending on the policy. Also check for exclusions in the coverage — for example, are sheds or outbuildings covered, or damage to landscaping?

Fireworks that malfunction and injure a person on your property (other than household members) could be covered under a section for medical payments to others. Coverage limits for no-fault medical expenses are usually fairly low. Depending on the policy, those limits range from $1,000 to $5,000 worth of coverage. This coverage typically kicks in if your injured neighbor or friend doesn't have health insurance and seeks to recover the medical costs from you.

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. Generally, most homeowners' insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available. Increasingly, agents and brokers recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of coverage of liability protection.