3.3 The New York Standard Fire Policy (165 Lines - N.Y. Ins. Law § 3404) & Statutory Baselines

The New York Standard Fire Policy (165 Lines - N.Y. Ins. Law § 3404) & Statutory Baselines

The New York Standard Fire Policy (SFP) is the cornerstone of modern American property insurance. First adopted by the New York State Legislature in 1886, revised in 1918, and established in its definitive form in 1943, the 165 lines of statutory policy text codified in New York Insurance Law § 3404 serve as the historical benchmark for property forms nationwide. For a New York public adjuster, mastering the 165 lines is essential because § 3404 defines the non-negotiable statutory baseline beneath which no property policy issued in New York may fall.

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Statutory Status & The Minimum Baseline Rule (§ 3404)

In modern insurance practice, insurers rarely issue a standalone, one-page Standard Fire Policy. Instead, fire coverage is bundled into complex multi-peril contracts, such as Homeowners (HO) policies, Commercial Package Policies (CPP), and Businessowners Policies (BOP). However, New York law maintains statutory control over all such contracts through N.Y. Ins. Law § 3404(b)(1):

"No policy or contract of fire insurance shall be made, issued or delivered by any insurer or by any agent or representative thereof, on any property in this state, unless it shall conform as to all provisions, stipulations, agreements and conditions with such form of policy …"

The "No Less Favorable" Rule

Section 3404(f)(1) allows a policy that insures fire alone or in combination with other coverages to use different wording, with the Superintendent's approval, provided that:

• (A) with respect to the peril of fire, its terms are no less favorable to the insured than the standard fire policy;
• (B) the standard policy's mortgagee provisions are incorporated without substantive change; and
• (C) the policy is complete as to all of its terms without reference to the standard policy.

For a public adjuster, the practical rule is that when a carrier's fire-related condition is harsher than the standard policy (a shorter suit limitation for a fire loss, for example), the standard policy's more favorable term supplies the measuring stick. Section 3404(f)(2) exempts automobile and aircraft physical damage and inland marine policies from these requirements.

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Perils Covered Under § 3404

The Standard Fire Policy is a named-peril contract insuring against three specific causes of loss:

1. Fire: Hostile vs. Friendly Fire

The policy covers direct loss by fire. However, New York common law draws a fundamental distinction between "friendly" and "hostile" fires:

• Friendly Fire: A fire burning intentionally in its designed and proper container or receptacle, such as a flame within a wood stove, furnace burner, fireplace, or candle wick. Damage caused solely by heat, soot, scorches, or smoke while the fire remains confined within its proper receptacle is not covered under the Standard Fire Policy.
• Hostile Fire: A fire that escapes its designated container or receptacle and burns outside its intended bounds, or a fire that begins where no fire was intended (such as an electrical fire behind a wall). Once a fire becomes hostile, all resulting direct physical damage—including thermal consumption, smoke and soot deposition throughout the building, and water damage caused by emergency firefighting efforts—is covered under the policy.

2. Lightning

Direct physical damage caused by lightning, such as structural shattering, fires it ignites, and arcing damage to building components.

3. Removal from Endangered Premises

The policy covers direct loss by removal from premises endangered by the perils insured against, and covers property removed for preservation pro rata for five (5) days at each proper place to which it is necessarily removed.

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Provision-by-Provision Breakdown of the Standard Fire Policy

The Standard Fire Policy is traditionally described as the "165-line" form. The statute prints it as continuous text, so the exam tests its provisions, not line numbers.

Concealment and Fraud

"This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto."

• Willful concealment, misrepresentation, or false swearing, including in a proof of loss or at an examination under oath, voids the policy.

Uninsurable and Excepted Property

• Not covered: accounts, bills, currency, deeds, evidences of debt, money, or securities.
• Excepted unless specifically named in writing: bullion and manuscripts.

Perils Not Included

Loss caused directly or indirectly by enemy attack, invasion, insurrection, rebellion, revolution, civil war, or usurped power; order of any civil authority, except destruction at the time of and to prevent the spread of a fire that did not start from an excluded peril; neglect of the insured to use all reasonable means to save and preserve the property at and after a loss or when endangered by fire in neighboring premises; and theft.

Other Insurance and Pro Rata Liability

• Other insurance may be prohibited, or the amount limited, by endorsement.
• Pro rata liability: the Company pays no greater proportion of any loss than its insurance bears to the whole insurance covering the property against the peril, whether collectible or not (Section 4.2).

Conditions Suspending or Restricting Insurance

Unless otherwise provided in writing, the Company is not liable for loss occurring:

• while the hazard is increased by any means within the control or knowledge of the insured;
• while a described building is vacant or unoccupied beyond a period of 60 consecutive days; or
• as a result of explosion or riot, unless fire ensues, and then for loss by fire only.

Waiver Provisions

No permission or waiver is valid unless granted in the policy or in writing added to it. No provision is waived by any requirement or proceeding relating to appraisal or to any examination provided for in the policy (Section 11.5).

Cancellation

• The insured may cancel at any time and receives the excess of paid premium above the customary short rates.
• The Company may cancel on five days' written notice, with the excess of paid premium above the pro rata premium tendered or refunded on demand.
• New York's later statutes (§ 3425 for covered personal lines and § 3426 for commercial lines) add reason and notice requirements on top of this baseline (Section 4.1).

Mortgagee Interests and Obligations

The Standard Fire Policy's own mortgagee paragraph provides that:

• a designated mortgagee's interest may be cancelled only on ten days' written notice to the mortgagee;
• if the insured fails to render proof of loss, the mortgagee, upon notice, must render proof of loss within 60 days and is then subject to the appraisal, time-of-payment, and suit provisions; and
• if the Company claims no liability to the owner, it is subrogated to the mortgagee's rights to the extent it pays the mortgagee, or it may pay off the mortgage debt and take an assignment.

The broader protection that the mortgagee's recovery survives the owner's acts comes from the standard (union) mortgage clause attached to the policy (Sections 4.2 and 11.3). Section 3404(f)(1)(B) requires non-standard policies to carry the SFP's mortgagee provisions without substantive change.

Requirements in Case Loss Occurs

The insured must:

1. Give immediate written notice of any loss;
2. Protect the property from further damage;
3. Separate damaged and undamaged personal property and put it in the best possible order;
4. Furnish a complete inventory showing quantities, costs, actual cash value, and amount of loss claimed;
5. Within sixty days after the loss, unless extended in writing by the Company, render a signed and sworn proof of loss stating the time and origin of the loss, the interests of the insured and all others, the actual cash value and loss of each item, encumbrances, other insurance, changes in title, use, occupancy, or exposure, and related facts. N.Y. Ins. Law § 3407 protects the insured if the insurer never demands proof of loss on a suitable blank form (Section 11.1);
6. Exhibit the remains of the property, submit to examinations under oath by any person named by the Company and sign them, and produce books of account, bills, invoices, and vouchers for examination and copying.

Appraisal

• If the parties fail to agree on actual cash value or the amount of loss, either may make a written demand for appraisal.
• Each party selects a competent and disinterested appraiser and notifies the other within 20 days of the demand.
• The appraisers select a competent and disinterested umpire. If they fail for 15 days to agree, the umpire is selected by a judge of a court of record in the state in which the property is located, on request of either party. Ins. Law § 3408 provides for application to a supreme court justice or county judge in the county where the property is located.
• The appraisers state separately actual cash value and loss to each item, and submit only their differences to the umpire. An award in writing, so itemized, of any two, when filed with the Company, determines actual cash value and loss.
• Each party pays its own appraiser. Umpire and appraisal expenses are shared equally.
• Scope: § 3408(c) states that appraisal determines actual cash value, replacement cost, and the extent of loss, but does not determine coverage. § 3404(g) makes appraisal determinations binding and enforceable by either party.

Company's Options and Abandonment

• The Company may take all or any part of the property at the agreed or appraised value, or repair, rebuild, or replace it with property of like kind and quality within a reasonable time, on giving notice within 30 days after receipt of the proof of loss.
• "There can be no abandonment to this Company of any property."

When Loss Payable

The loss is payable 60 days after proof of loss is received and the loss is ascertained, either by written agreement or by filing an appraisal award. (Regulation 64 imposes shorter deadlines once an amount is agreed; see Section 11.2.)

Suit

"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twenty-four months next after inception of the loss."

New York's standard policy allows 24 months, not the 12 months found in older national versions of the 165-line form.

Subrogation

The Company may require from the insured an assignment of all right of recovery against any party for the loss, to the extent payment is made by the Company.

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Master Reference: Standard Fire Policy Provisions