Question

As a name peril contract, the SFP (Standard Fire Policy) covers:

A. all perils not otherwise excluded
B. perils specified in the policy
C. fire only
D. perils are not covered under the SFP

Answer 1

The SFP or Standard Fire Policy is a named peril contract that covers perils specified within the policy itself. It does not cover all risks, only those explicitly mentioned or added through endorsements.

Step-by-step explanation:

The Standard Fire Policy (SFP) is a traditional insurance document that used to serve as the basis for fire insurance in the United States. The SFP covers perils specified in the policy, which traditionally include not only damage by fire but also other related perils, such as lightning and explosion. However, it is important to note that the SFP does not cover all risks; it is a named peril contract, meaning that only the perils explicitly cited in the policy are covered. Any risks that are not mentioned, or that have been expressly excluded, are not protected under the SFP.

The correct answer to the student's question "As a named peril contract, the SFP (Standard Fire Policy) covers:" is B. perils specified in the policy. Additional coverage could be added through endorsements, which would expand the range of covered perils beyond those named in the standard policy. It’s essential to carefully review a policy to understand exactly which perils are covered.