3-A STANDARD FIRE POLICY

Question 1

Standard Fire Policy

Answer 1

● First used in 1918 in New York
● Provided homeowner and commercial property protection
● ACV valuation
● Named peril policy
● Only covered fire and lightning

Question 2

“165 Line” Policy

Answer 2

The standard fire policy is also known as the “165 Line” policy, because it originally dedicated 165 lines to a variety of new insurance concepts that we still use today in all of our property insurance contracts.

Question 3

The original Standard Fire Policy dedicated 165 lines to explain new insurance concepts still used today in property insurance contracts, such as:

Answer 3

● Concealment and misrepresentation
● Property and perils excluded from coverage
● Insurance cancellation due to an increase in hazards
● Obligations to a mortgagee
● Requirements of the insured in the event of a loss
● Subrogation
● Appraisal

Question 4

Line of Coverage

Answer 4

A particular risk or group of risks covered by an insurance policy

Question 5

Monoline Policy

Answer 5

An insurance policy that covers only one risk or type of risk

Question 6

Monoline Policy Example

Answer 6

Say Jane owns a valuable stamp collection. She keeps some of the pieces at home on display, and the rest in a bank vault. If she wants to insure the entire collection against theft, she could purchase a ​monoline policy​ that covers only the stamp collection, nothing else.

Question 7

Standard Fire Policy​:

Answer 7

the foundation for property coverage

Question 8

4 Parts of the Standard Fire Policy:

Answer 8

1. Declarations Page
2. Insuring Agreement
3. Conditions
4. Exclusions

Question 9

Declarations Page (“Dec Page”)​:

Answer 9

gives an overview of the whole policy, and states:

● Named insured
● Location of the insured property
● Policy period
● Policy premium
● Coverage types
● Coverage limits
● Any applicable endorsements

Question 10

The Declarations Page is always the ____ part of an insurance policy.

Answer 10

first

Question 11

Insuring Agreement​:

Answer 11

states exactly what the policy covers and what the insurer will pay or provide in exchange for the insured’s premiums

Question 12

Conditions​:

Answer 12

describes certain issues that can restrict or suspend coverage, including:

● A list of duties, rules of conduct, and obligations for the policyholder & for the insurer
● Proof of loss
● Preservation of property
● Cancellation
● Assignment
● Subrogation
● Other insurance
● Vacancy

Question 13

Requirements in Case Loss Occurs

Answer 13

● Notify insurer of the loss immediately
● Protect the property from further damage
● Organize personal property, separating damaged from undamaged
● Make checklist of damaged and undamaged property with details about ACV
● Submit to examination under oath
● Show the insurance company (upon request):
○ remains of damaged property
○ accounts, bills, invoices
● Submit proof of loss form within the specified time period

Question 14

Periods of Limitations Tolled

Answer 14

● State statutes often pause (toll) limitation periods from date claimant files a proof of loss to date claim is paid or denied
● This protects claimant’s right to sue the insurer, even if insurer denies claim after period of limitation expires

Question 15

Exclusions​:

Answer 15

states which perils are NOT covered under the policy, such as:

● Extreme perils that cause catastrophic damage to multiple policyholders at a
time
● Intentional losses
● Risks that are impossible to quantify
● Risks brought on by a policyholder’s negligent actions

Question 16

Common Policy Exclusions​:

Answer 16

● Earthquakes and earth movements, such as landslides or mudflows
● Floods and water damage, such as water seeping through the foundation of a
home
● War and / or acts of terrorism
● Nuclear hazards
● Governmental actions (such as drug forfeiture) or court seizure
● Intentional losses such as arson
● Mutiny or military action
● Ordinance or law (such as when building code upgrades force a homeowner to
remodel)

Question 17

Endorsements

Answer 17

Written documents attached to a policy that add or change coverage for specific perils or insured items

● Can be added when a policy is purchased
● Can be added anytime during the term of the policy
● Also called “riders,” “addendums,” or “attachments”

Question 18

Endorsements Example

Answer 18

A standard fire policy applies ​actual cash value valuation​ to insured property, but many policyholders prefer to add an endorsement to their insurance contract that upgrades their coverage to ​replacement cost valuation​.

Question 19

Modern property insurance policies are based on the Standard Fire policy

Answer 19

● Optional endorsements are added to broaden or individualize coverage
● The Standard Fire Policy is a “springboard” for all comprehensive residential
and commercial property policies