Standard Fire and Special Perils policy

What is the Standard Fire and Special Perils policy?

The Standard Fire and Special Perils (SFSP) policy is the named-perils property wording that Indian general insurers have used for decades to cover buildings, plant, machinery, furniture and stock. It pays only when the damage is caused by one of the perils listed in the policy, so a loss from an unlisted cause (theft, for example) is not covered unless it is added. The wording began life inside the All India Fire Tariff, 2001, which is why brokers and underwriters still refer to it simply as "SFSP".

Since April 2021, homes and businesses with up to ₹50 crore at risk at one location are covered under the Bharat standard products instead. SFSP and insurers' own variants of it now serve mainly mid-sized and large commercial and industrial risks.

What the SFSP policy covers

The named perils in the SFSP wording are:

• Fire, lightning, and explosion or implosion
• Aircraft damage
• Riot, strike and malicious damage (RSMD)
• Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation (STFI)
• Impact damage by a vehicle or animal not belonging to the insured
• Subsidence and landslide, including rockslide
• Bursting or overflowing of water tanks, apparatus and pipes
• Missile testing operations
• Leakage from automatic sprinkler installations
• Bush fire

Earthquake, terrorism, spontaneous combustion, forest fire, and removal of debris above the built-in limit are taken as add-ons. War, nuclear risks and loss of profit are outside the base cover, and an excess applies to each claim.

How the SFSP policy works today

General insurance pricing was de-tariffed from 1 January 2007, but the SFSP wording stayed in force through the tariff. IRDAI de-notified the All India Fire Tariff by a notification of December 2020 and, according to the IRDAI Annual Report 2024-25, de-notified the remaining fire policy-wording tariffs with effect from 1 April 2024. The practical effect is that SFSP is now a market-standard wording that each insurer files as its own product under the IRDAI (Insurance Products) Regulations, 2024. Most insurers keep the familiar SFSP structure and add their own enhancements.

Large SFSP placements are usually priced off reinsurance treaty terms and, for the biggest risks, facultative reinsurance. Policies are commonly written on reinstatement value for buildings and machinery, with stock on a declaration or floater basis where values move.

What the SFSP policy means for distribution

• It is a specialist sale. SFSP buyers are finance and risk managers at mid-sized and large firms. They expect a broker or a commercial lines team to explain wording differences, deductibles and add-on pricing. Retail-style selling does not work here.
• Named perils need careful explaining. The most common claim dispute is a loss the customer assumed was covered. A good adviser walks through what is not listed (theft without a fire, gradual deterioration, machinery breakdown) and points to the right add-on or separate policy.
• Wording comparison is now real work. With tariffs gone, two SFSP quotes can differ in excess, sub-limits and add-on definitions. Intermediaries who compare wordings, not just premium, earn trust and reduce claim friction.
• Values drive the claim. SFSP buyers with understated reinstatement values face proportionate claim cuts. Insisting on an updated valuation at renewal is a service point and a compliance safeguard.
• Business interruption is the natural cross-sell. Fire loss of profit cover depends on the SFSP policy being in force and the loss being admissible under it, so the two are best placed together.