Fire insurance has over two hundred years of American history. Some buildings
in Philadelphia still display the early fire marks of Benjamin Franklin's
era. Early subscribers would pay fire-fighting firms in advance; they
would receive a (metallic logo) to replace their building outside. Fire-mark
payments helped fire-fighting firms. If a protected property had a fire,
the firefighting company was notified; once the fire mark was found, the
fire was fought.
Insurers drafted their plans during the early years of fire insurance,
and contracts lacked uniformity. The contracts were lengthy and restrictive;
the contracts contained multiple moral hazard clauses and other restrictive
provisions, allowing insurers to refuse claims; the contracts were cumbersome
and difficult to understand. In 1873, Massachusetts became the first state
to introduce a standard fire insurance scheme. In 1886, New York passed
similar legislation. The standard fire policy was later revised in 1918,
then in 1943. The 1943 New York Model Fire Policy is still used in most
states, and some states use small variants.
Two significant benefits arise from uniform regulation, such as the Uniform
Fire Regulation. First, loss-adjustment issues are minimized when two
contracts with different policy clauses are minimized. Second, there are
fewer legal problems as the courts repeatedly interpreted the standard
contract terms, phrases, and clauses, and their context is more accurately
The SFP (Standard Fire Policy) is an agreement that is incomplete, incorporating
a suitable type. A type must be added as the property has different features,
and person and business insurance needs vary widely. In recent years,
the SFP has declined.
Many states have enacted legislation requiring more readable insurance
contracts. Given the trend towards readable contracts and bundle plans,
the SFP was abolished as a separate policy for some forms of insurance,
and required clauses are now integrated into the new contracts.
Despite its weakness, the SFP remains a significant text. Newer readable
contracts incorporated the requisite SFP clauses. Numerous fundamental
property insurance concepts were first legally established in the SFP,
e.g., the principles of compensation, insurable interest, real cash value,
and loss prorating. Finally, the SFP is also used to protect commercial
buildings and business property not eligible for coverage under the new
"Fire" is never specified in insurance contracts, possibly because
the courts determine its definition. Next, combustion or rapid oxidation
must result in a flame or at least a glow. Scorching, boiling, and charring
without a flame or glow are not shielded. Second, the fire must be hostile.
It doesn't matter whether a fire starts as friendly and subsequently
becomes hostile, or if a fire starts as hostile if an insured is to collect
for a fire loss, the next cause or cause must be a hostile fire.
If water damage occurs when the fire department puts out a hostile fire,
the close cause of water damage would be the hostile fire, and a fire
policy would cover this damage.
Fortunately, most property owners typically buy fire insurance in packages
describing other related risks. Therefore, legal problems traditionally
faced by insured buying only "fire" insurance should not be
SFP protects the designated insured and their legal advisor. The appointed
insured may be an entity, company, or organization. As a designated insured,
a non-specified party has no legal right to collect a loss payout directly,
despite possessing an insurable interest in the property at the time of loss.
- The regulation face amount;
- True cash value;
- Fix or replace the property with identical materials;
- No provision for higher maintenance costs due to any ordinance or legislation
- No revenue coverage or other indirect loss;
The insurance agreement covers just three risks. Specifically, to have
coverage under the SFP, a covered hazard must be the proximate cause of
damage. This assumes there is an unbroken chain of incidents between an
insured risk and property damage or loss.
The SFP can not be validly allocated without the written permission of
If the insured willfully hides or conceals a material fact or makes a material
misrepresentation before or after a loss, the insurer may cancel the policy.
This includes accounts, bills, currency, debt, money, and securities.
- Attack enemy;
- The uprising;
- In rebellion;
- Civil warfare;
- Power usurped;
- Any civil authority's order;
- Insured failure to protect property;
- Increased material threat
- Sixty days' vacancy
- No riot or explosion coverage until a fire occurs
Standard Fire Provisions
- Waiver prohibition
- No policy clause may be waived unless written and added to a policy.
Either the insured will cancel the SFP. In this case, the insured will
receive a premium refund based on the short-rate table, not a prorated
refund based on the unearned premium.
Protecting mortgage interest
- Separate insurance purchase
- Assignment by insured loss payable clause Standard
Applies where more than one regulation protects the same insurable property interest.
Proof of loss
The insured must give the Company prompt written notice of the loss. The
insured must protect the property from further harm. If the company writes,
the insured must file proof loss evidence within 60 days.
The valuation provision is used when the insured can not agree on the real
cash value or loss. The appraisal provision aims to mitigate litigation
and provide a reasonable and fair process to settle any loss dispute.
The company will pay the claim in dollars or repair, restore or replace
the property with materials of the same nature and quality.
The company has the opportunity to take salvage at its negotiated or valued
value, but the company can't be pressured to take salvage, and the
insured can't leave.
Insurers must compensate for the loss within sixty days of obtaining proof of loss.
A claim against the company involving the loss must be brought within twelve
months of the loss and only after complying with all insurance requirements
on the insured's responsibilities at the time and after the loss.
SFP has a subrogation clause. The insurer may require the right to compensation
from any party that may have caused the damage to the extent of the damage payout.
A fire insurance rate is a risk expense per hundred dollars. The premium
is determined by multiplying the number of hundreds of dollars of value
in the exposure.
Class rating and schedule rating works by combining equivalent units into
a class and then charging a class rate representing the class's loss
experience and expenses. It analyzes each property individually and is
mainly used in commercial buildings.
The 1943 New York Standard Fire Insurance Policy formed the foundation
of American fire insurance contracts. Commercial fire insurance is part
of a seven-part commercial insurance plan. Land coverage falls into three
categories: homes, personal property, and other property. Fire and ten
other perils are raw-shaped causes of destruction. More extensive coverage
in broad and unique ways. Indirect loss compensation is required for lost
revenue and additional expenses after a direct loss. Profits lost due
to direct losses at dependent assets may also be covered.
Fire insurance premiums are typically scheduled or class-rated. Schedule
rating involves contrasting the property with regular exposure, increasing
or decreasing the premium for desirable or unnecessary features. The class
rating means putting property in a class with identical exposures.