- /
State Farm License- Standard Fire Policy
1.Standard Fire Policy: - the policy written for both Personal Lines
(residential home or dwelling) or as Commercial Lines (official building) are the same!-fire insurance is another name for property insurance -can insure the building structure and/or the personal property.-not a HO policy since it does not cover theft of content and does not have liability coverage -never sold w/o adding Endorsement to the policy. (Endorsement is a form added to a policy that changes the policy's provision, usually with extra premium) 2.what are the 4 parts of standard fire coverage ANS 1. Declaration (Dec
Page): states the name of insurance comp (1st party) and the insured
(2nd party); address of property; amount of coverage, premium, and policy period.
2.Insuring Agreement
3.Condition: The condition apply to both the insurer and the insured.
Ex: the insured must notify the insurance comp in writing of any loss. 1 / 3
- /
- What are the things that are part of the insuring agreement? (standard
Must do this in order for coverage to apply.
4.Exclusions: Something that never covered. Ex: war is not covered by standard fire policy.
fire policy): 1. Consideration Clause: the applicant 's consideration is the amount of the premium paid and the company's agreement to pay covered claims and abide by the provisions. REQUIRED TO MAKE A
VALID CONTRACT.
2.Effective Time: policy starts and end @ 12:01 am on the Inception and Expiration date shown on Dec Page. Usually written for 1 year.
3.Effective Location: Location of the property insured
4.Policy Limit: In the event of a claim, the policy will never pay the
insured more than the policy limit that is indicated in the Dec Page.
5.ACV: The depreciated value or also called "today's replacement cost
minus depreciation." The policy will pay the insured the policy limit or the ACV whichever is less. The policy will depreciate a building at a rate of 1% per year up to max 40% (or 40 years). If the building is brand new, there is no depreciation and the replacement cost (R/C) is the same as the ACV. 2 / 3
- /
(Note that Property Insurance does pay claims on a replacement cost basis, but the Standard Fire Policy will not. They will only pay in ACV)
6.Company's Options: Insurance comp has the option to repair the
property or to pay the claim with materials of like kind and quality whichever is best for the comp.
7.Direct Versus Indirect Losses: only covers Direct Losses.
Ex: Fire Indirect losses are not covered.
Ex: in the case of fire, the fire cause damage to the building is the
direct cost. Now as a result of the fire, you can't operate your business until the repairs were completed. The loss of business income during this time is the indirect result of the fire and is NOT covered.
8.Insurable Interest: must exist at the time of lost. You cannot recover
more than the interest you lost. You can name your bank as a mortgagee on the policy, so that the bank's equity interest (Collateral Security Interest) is also protected by the policy.
9.Perils: defines a a cause of loss. Standard Fire Policy cover only three
perils:
-Direct loss by Fire -Lighting -Removal 4.What is Actual Cash Value (ACV) in Standard Fire Policy ANS Insurance
- / 3