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I'm in the planning stage of finishing my basement. I'd like to section off the furnace and water heater, and am assuming that I should fireproof that section of the build.

What's the best way to go about it?

My guess would be steel studs and concrete board instead of drywall, and a steel door.

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As best I know, a fire rated utility room isn't required by any code for a single family structure. And for multi-family (e.g. condos), this requirement is to isolate each residence from each other and from common/utility areas. So the below advice is completely overkill.

For the room itself, you can use fire rated drywall. This is usually 5/8" thick, and contains fiberglass within the wall to keep its structure during a fire. Use this on all walls and ceiling. Around any protrusions, (HVAC vents, water pipes, etc), you can fill the gaps with fire rated expanding foam (e.g. Great Stuff). This is usually pink/red in color instead of the normal yellow. For HVAC vents, you can get spring loaded dampers that automatically shut in the event of a fire to prevent it from spreading via the ducts. You can get a fire rated solid door, but to do so, you also need to get an outside air source into this room.

All of the fire rated products are to slow the spread of fire, not to stop it completely. The goal is to get you out of the home safely, before it spreads and you're trapped. Therefore, I'd recommend installing a fire alarm that is connected to the other alarms in the house, ensuring that if a fire starts in this room, you'd know about while there's plenty of time to escape. A standard fire alarm in an enclosed room could easily go unnoticed, or allow you to sleep through it.

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Excellent answer. A major consideration making a tight 1 hour fire rated room is providing enough combustion air to the burners. A duct to outdoors is common. Any air vent opening to the interior without thermo/smoke activated closure would compromise the whole theory and make the work and expense mute. Consider a personal protection rated sprinkler head if you really want extra escape time. Simple and cheap to install directly off domestic cold water supply. –  shirlock homes Nov 12 '11 at 12:43
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Anything beyond 5/8" fire rated drywall (which is rated for ~1 hr) is probably overkill, including metal studs. Even 1/2" drywall is rated for ~30 minutes -- in a residential setting I would tend to think it's enough.

The most important things:

  • Install a smoke and heat detector, and have it connected to the rest of the alarms in the house so if it's activated, they all alarm.
  • If you has gas heaters, you should also have a carbon monoxide (CO) detector nearby - it's not recommended to put it right in the room, but outside the door is fine.
  • Don't keep combustible materials near heat sources -- your furnace room not the place to store your paper towels, paint thinner, and gasoline.
  • Keep a charged extinguisher in a known place, and check it yearly (I have one in my kitchen, and one in my laundry room, which the furnace room is attached to)

If you don't have combustibles in the room, then consider the other sources of fire: one obvious one would be inside the furnace itself. If that happens, the smoke and heat (and if they get big enough, flames) are going to travel to the rest of your house via the air ducts anyway, rending all your money and effort of fireproofing the room itself mostly useless.

This is why I think going beyond regular drywall is pointless. Smoke can do just as much damage to the house as fire (even if it doesn't LOOK as drastic, it can still require replacing everything). More people actually die of asphyxiation from smoke from a fire than anything else. Basically, if there is a fire, you want to know ASAP, and either put it out with an extinguisher or get out.

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Remember that if you put your fire extinguisher right at the likely location of a fire, you may not be able to get to it in case of fire. I put mine at a doorway. –  Jay Bazuzi Nov 12 '11 at 17:57
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