State Farm License- Standard Fire Policy Questions And Answers

State Farm License- Standard Fire Policy
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State Farm License- Standard Fire Policy Questions
And Answers
1. Standard Fire Policy: - c c c


the policy written for both Personal Lines (residential home or dwelling) or as Com
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mercial Lines (official building) are the same!
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- fire insurance is another name for property insurance
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- can insure the building structure and/or the personal property.
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- not a HO policy since it does not cover theft of content and does not have liability cov
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erage
- never sold w/o adding Endorsement to the policy. (Endorsement is a form added to
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a policy that changes the policy's provision, usually with extra premium)
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2. what are the 4 parts of standard fire coverage?: 1. Declaration (Dec Page): stat
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es the name of insurance comp (1st party) and the insured (2nd party); address of prop
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erty; amount of coverage, premium, and policy period.
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2. Insuring Agreement c




3. Condition:The condition apply to both the insurer and the insured. Ex: the insured mu
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st notify the insurance comp in writing of any loss. Must do this in order for coverage to
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apply.

4. Exclusions: Something that never covered. Ex: war is not covered by standard fire pol
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icy.
3. What are the things that are part of the insuring agreement? (standard fire po
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licy): 1. Consideration Clause: the applicant 's consideration is the amount of the premi
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um paid and the company's agreement to pay covered claims and abide by the provisi
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ons. REQUIRED TO MAKE A VALID CONTRACT.
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2. Effective Time: policy starts and end @ 12:01 am on the Inception and Expiration dat
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e shown on Dec Page. Usually written for 1 year.
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3. Effective Location: Location of the property insured c c c c c c


1c/c
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, State Farm License- Standard Fire Policy
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4. Policy Limit: In the event of a claim, the policy will never pay the insured more than the
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policy limit that is indicated in the Dec Page.
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5. ACV: The depreciated value or also called "today's replacement cost minus deprec
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iation." The policy will pay the insured the policy limit or the ACV whichever is less.The p
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olicy will depreciate a building at a rate of 1% per year up to max 40% (or 40 years). If the
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building is brand new, there is no depreciation and the replacement cost (R/C) is the sa
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me as the ACV.
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(Note that Property Insurance does pay claims on a replacement cost basis, but the
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2c/c
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