Fire Policy Terms, Conditions and Standard Covers
What the exam tests
This domain tests the Standard Fire and Special Perils (SFSP) policy: standard covers, exclusions, conditions, and endorsements. You must read the policy as a contract and identify what is covered, what is excluded, and which condition changes the claim.
Standard covers and exclusions
The SFSP standard covers include fire, lightning, explosion/implosion, aircraft damage, riot/strike/malicious damage, storm/tempest/flood/inundation, impact damage, subsidence/landslide, bursting/overflowing of water tanks/apparatus, missile testing operations, leakage from automatic sprinkler installations, and bush fire. Cover is subject to exclusions such as war and nuclear risks, pollution, wilful act or gross negligence, natural ageing, faulty design, electrical/mechanical breakdown, theft, mysterious disappearance, and consequential loss.
Conditions and endorsements
Key conditions include average, contribution, subrogation, alteration, reasonable care, salvage, arbitration, and cancellation. Add-ons are not automatic: earthquake, terrorism, removal of debris, architects'/engineers'/surveyors' fees, reinstatement value, declaration, and floater covers must be specifically attached and their terms satisfied.
Worked example
A short circuit in a distribution panel starts a fire that damages the building and stock. The fire damage to building and stock is covered under the fire peril. Damage to the panel and wiring itself is excluded by the electrical clause, which excludes loss to electrical apparatus from short circuiting, arcing or self-heating unless fire ensues. If no fire had ensued, the electrical damage would not be covered.
Traps
Do not assume theft following a fire is covered. Do not treat "bush fire" as forest fire. Do not ignore the average clause or policy excess. Do not apply an add-on without checking whether it was attached, its sum insured, and its deductible.