Standard Fire & Special Perils (SFSP) Policy for Home

What is the SFSP for Homes?

At its core, an SFSP is a "named perils" property insurance policy, meaning it covers the insured property (building, and often contents) against a specific list of events ("perils") defined in the policy wording. It is not an "all risks" policy (covering everything except excluded perils). Still, it offers a broad list of usual property risks such as fire, lightning, flood/inundation, impact damage, etc.

Coverage Under Standard Fire & Special Perils Policy (SFSP) for Homes

1. What's Covered — The Insured Property

In a home insurance context, the SFSP usually covers two main components:

1. A) The Building Structure:
   This includes the main residential building, its walls, roof, foundation, and permanent fixtures and fittings like tiles, pipelines, or electrical wiring.
   You can also extend the cover to include additional structures within your premises, such as:
   • Garage or car parking area
   • Verandah or balcony
   • Boundary walls and gates
   • Domestic outhouses (for residential use)
   • Water tanks, internal roads, or compound areas

Essentially, anything part of your home's physical structure can be covered under the "building" section.

1. B) Home Contents:
   The second part of the cover protects the belongings inside your home. These are usually your household items, such as:

• Furniture, furnishings, and carpets
• Electrical and electronic equipment (like TVs, fridges, washing machines, computers, etc.)
• Kitchen appliances and utensils
• Personal items such as clothes and accessories

Some policies even allow you to specify valuable or high-cost items separately to ensure adequate coverage.

2. What's Protected — The Covered Perils

The heart of the SFSP is its list of named perils, which means specific events that the policy protects against. These are typically:

• Fire and lightning
• Explosion or implosion (e.g., from a gas cylinder or boiler)
• Damage caused by aircraft or aerial objects
• Riot, strike, or malicious acts
• Storms, cyclones, hurricanes, typhoons, or tornadoes
• Flood and inundation
• Impact damage (caused by vehicles, animals, or falling objects)
• Subsidence, landslide, or rockslide
• Bursting or overflowing of water tanks, pipes, or other apparatus
• Leakage from automatic sprinkler systems
• Missile testing operations or bushfire

Simply put, the SFSP policy provides broad protection against most natural and accidental hazards that can cause damage to your home or belongings.

However, some catastrophic events, such as earthquakes or acts of terrorism, may not be included by default. These usually require you to opt for an additional add-on cover by paying an extra premium.

3. Exclusions of SFSP Policy — Not Covered Perils 

While SFSP offers extensive protection, certain risks are not covered. These exclusions are standard across most policy wordings.

Typical exclusions include:

• Damage due to war or warlike operations
• Nuclear or radioactive contamination
• Pollution or contamination not directly resulting from an insured peril
• Theft or burglary (unless specifically added as an add-on)
• Consequential losses, such as lost rent or loss of earnings, unless separately insured
• Mechanical or electrical breakdown of equipment
• Damage due to poor construction, faulty design, or lack of maintenance
• Unoccupied property beyond a certain number of days (usually 30 to 60 days) without prior notice
• Volcanic eruption or other convulsions of nature (if not specifically covered)

*Disclaimer: The above-mentioned are general inclusions and exclusions of the policy, and they might vary from insurer to insurer. Kindly check them before buying the SFSP policy.

SFSP Policy Add-On Covers for Home

A standard SFSP gives good basic protection, but many homeowners enhance it with optional add-ons to make it comprehensive protection.
Some common add-on options include:

• Earthquake (Fire and Shock) Cover: It protects your home and contents if damaged due to an earthquake or tremors.
• Terrorism Cover: It covers loss or damage caused by terrorist acts.
• Loss of Rent or Alternate Accommodation: It compensates you for lost rental income or expenses for temporary accommodation if your home becomes unfit to live in after an insured event.
• Removal of Debris & Professional Fees: It covers costs for debris removal, architect or surveyor fees during reconstruction.
• Omission to Insure Additions or Alterations: It protects new constructions or changes that may not yet be added to your policy.
• Temporary Removal of Contents: It covers contents that are temporarily taken outside your home (e.g., for repair or storage).

Sum Insured and Claim Settlement for SFSP Policy for Home

This part defines how the insurer calculates compensation in case of loss or damage.

• For the Building:
  The sum insured should reflect the reconstruction or reinstatement cost of your home. It means how much it would cost to rebuild today, using similar materials and workmanship. The land cost is not included in this, since perils like fire or storm cannot damage the land.
• For Contents:
  Household contents are usually insured for their replacement value, i.e., what it would cost to buy the same or similar items new, after factoring in depreciation where applicable.
• Underinsurance (Condition of Average):
  Your claim may be paid proportionately lower if your home is insured for less than its actual reconstruction cost.
  For example, if your home's rebuilding cost is ₹40 lakh but you insure it for ₹20 lakh, and you suffer damage worth ₹10 lakh, the insurer may only pay half that amount (₹5 lakh). Hence, keeping your sum insured accurate is essential.

Policy Duration of SFSP Policy for Home

Typically, an SFSP runs for one year, after which it must be renewed. However, insurers often allow long-term policies for residential properties, commonly for 3 to 10 years at discounted rates. This option is especially beneficial for homeowners who want to remove the hassle of annual renewal and continue with the same coverage.

Deductibles and Excess

Most SFSPs have a small portion of the claim that you, as the policyholder, must bear yourself. This is known as the deductible or excess.

Obligations and Conditions for Homeowners

To keep your cover valid, most insurers ask you to follow the basic obligations or conditions:

• Keep the premises well-maintained and in a good state of repair.
• Inform the insurer if the property becomes unoccupied for an extended period.
• Notify the insurer promptly if there are structural changes or new constructions.
• Take reasonable steps to prevent further damage after an incident (for example, turning off the main water supply if a pipe bursts).

All these conditions help ensure smooth claim settlement and prevent disputes during assessment.

Claim Settlement Process for SFSP Policy in India

If your home suffers damage from an insured peril, you can raise a claim by following these steps:

1. Notify your insurer immediately about the incident.
2. Take photos or videos as evidence of the damage.
3. Avoid discarding damaged items until the surveyor inspects them.
4. The insurer will appoint a licensed surveyor to assess the extent of loss.
5. Submit all relevant documents such as proof of ownership, bills, repair estimates, and claim form.
6. After verification, the insurer will settle the claim based on the policy terms and the assessed loss.

Why Homeowners in India Should Consider Buying an SFSP Policy for Their Home?

 Even though many people associate fire insurance with businesses or factories, the SFSP is equally vital for individual homeowners. Here's why:

• Wide Coverage: It protects your home against major natural and accidental perils.
• Affordable Premium: Since it's a named-peril policy, premiums are much lower than those of "all-risk" policies.
• Flexible Options: Depending on your risk profile, you can tailor the policy with add-ons like earthquake or rent cover.
• Long-Term Security: Multi-year options mean you stay covered without frequent renewals.
• Peace of Mind: Knowing your life's most significant investment is protected from unforeseen disasters is invaluable.

FAQs – SFSP Policy for Home