Text (US+errata): If a red spell would deal damage to a creature or player, it deals that much damage plus 1 to that creature or player instead. [Oracle 2009/07/08]
The ability is a replacement effect (see Rule 614) which is applied when damage would become dealt. [D'Angelo 1999/05/01]
If the red spell damages more than one target, add 1 to each target. [DeLaney 1998/10/17]
Remember that a "spell" is a non-land card being played from a player's hand. The combat damage and the abilities of permanents won't trigger this. And "comes into play" abilities won't trigger this. [D'Angelo 1998/11/10]
