WHAT IS FIRE INSURANCE?
• COVERED PERILS
• PROVISIONS OF A STANDARD FIRE POLICY (SFP) (TSP in Texas)
• CANCELLATION OF INSURANCE
• LOSS NOTIFICATION PROCEDURE
• CONDITIONS OF SFP (TSP in Texas)
• SUMMARY


WHAT IS FIRE INSURANCE?

For the purpose of Insurance, fire is defined as a rapid oxidation, which causes a flame
or a glow at the minimum. Also, it must be a hostile fire, if the insured is to collect for a
fire loss; the immediate cause of loss must be fire, whether directly or indirectly.

Example

If there has been a discernable amount of water damage when fire-fighting efforts were
underway, the coverage would be admissible. Thus, when fire insurance is purchased, it
already contains a number of specified related perils.

COVERED PERILS

The SFP (TSP in Texas) is a named peril policy and usually covers the
following specific perils:
P Fire and Lightning
P Extended Coverage
P Explosion
P Rents or Rental Value

PROVISIONS OF A STANDARD FIRE POLICY (SFP)

􀂃 The legal representatives of the insured, or the insured himself, are covered through
the SFP. A person who has interest in the property, but has not been named, does
not qualify for coverage.
􀂃 Settlements are made only on the face amount of the policy to the extent that it
takes to repair or replace the property with similar material.
􀂃 No coverage is allowed for an indirect loss. For example: Loss of business income
􀂃 Any allowable loss must necessarily have been sustained by reason of a fire, or
another insured peril.
􀂃 The policy may be assigned in favor of another person, but only with the consent of
the insured.

CANCELLATION OF INSURANCE

Insurance will be suspended under the following circumstances:
􀂃 If there is a significant increase in fire hazard
􀂃 If the property is left vacant for more than sixty days
􀂃 Riot or explosion damage will not be covered, unless a fire breaks out.

LOSS NOTIFICATION PROCEDURE

In case of a loss, the insurer needs to proceed as follows:
􀂃 Immediate written notice of the loss to the insurance company
􀂃 Insured must take adequate steps to protect the property from further loss
􀂃 Must provide proof of loss within sixty days
Important Point
When the insured and the insurer cannot come to an agreement regarding the value of
the loss, an appraisal clause is enforced. This is done to reduce chances of litigation
and try to introduce an equitable procedure to come to an understanding of the amount
of loss.

CONDITIONS OF SFP

The contract would be deemed null and void in the following circumstances:
􀂃 In case the insured willfully conceals or misrepresents a significant fact
􀂃 In case of excluded property that is mentioned from the insurance contract
􀂃 And other instances such as:
• Excluded perils
• Invasions
• Civil war
• Neglect of the insured in protecting the property
• Theft
SUMMARY
We just finished the lesson covering the information about Fire Insurance. This lesson
covers the Provisions of a Standard Fire Policy (SFP), Cancellation of Insurance, Loss
Notification Procedure and Conditions of SFP.