Understanding Broad Form Insurance: Definition, How It Works, and Examples
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Summary:
Broad form insurance is an extended coverage that goes beyond the basics to protect against less common and potentially significant risks. This type of insurance often demands a higher premium and may include deductibles. It can be applied to various insurance types, including investments and assets, making it a valuable option for those who require added protection.
What is broad form insurance?
Broad form insurance coverage extends beyond the basics to include rare events that may be of serious risk to the insured. This type of insurance usually requires that a higher premium, and often a deductible, be paid. Broad form insurance can be applied to nearly all forms of insurance, including investments, assets, etc.
Understanding broad form insurance
Broad form insurance extends beyond basic coverage. One example of broad form insurance coverage is automotive glass insurance. A customer may need glass insurance because they’re frequently on roadways that cause damage to windshields. Glass insurance is not offered under basic automotive insurance plans and therefore must be specifically requested, and a premium must be paid.
The definition of the term “broad form insurance” can vary, depending on the type of insurance. With most insurance policies, a policy is usually basic or broad form. For example, for business insurance, there is usually:
- A basic form policy that typically covers fire, explosions, storms, smoke, riots, vandalism, and sprinkler leaks.
- A broad form policy that adds more coverage, such as damage from broken windows and other structural glass, falling objects, and water damage.
- Special form coverage offers the widest range of protection, typically covering all risks (including theft) unless specifically excluded from the policy.
In most states, insurers refer to a broad form policy in reference to a comprehensive general liability insurance policy that provides a wide range of coverage that can be tailored to suit specific needs.
Some auto insurers have to offer broad form insurance options to businesses, which provide coverage for employees, executives, or any other person who is supplied a company vehicle, but who does not own a personal vehicle and, thus, does not have coverage under a personal auto policy. In such a situation, an endorsement may be added that gives protection while the named individual or spouse is driving a car borrowed from a third party.
Broad form insurance example
In Michigan, for example, insurers can offer three types of auto collision coverage: limited, standard, and broad form. The protection provided by the three types of coverage differs based on fault in an accident:
Standard
Repair or replacement of an insured car is covered, regardless of fault. You’ll be responsible for a deductible if you ever file a claim.
Broad
You’ll only have to pay your deductible if you’re found to be more than 50 percent at fault in a covered accident. If you’re less than 50 percent at fault, you won’t have to pay your deductible.
Limited
Repair or replacement of an insured car is covered only if the driver is less than 50% at fault. In this case, you’ll have to pay your deductible. However, if the insured car’s driver is more than 50% at fault, damages from the incident are not covered.
Frequently asked questions
What types of insurance can have broad form coverage?
Broad form coverage can be applied to various insurance types, including auto insurance, business insurance, and more. It often extends coverage to less common risks.
How do I obtain broad form insurance?
To obtain broad form insurance, you typically need to request it as an endorsement or rider to your existing policy. Your insurance provider will guide you through the process.
Are broad form policies available in all states?
The availability of broad form policies can vary by state and insurance provider. It’s important to check with your insurance company to see if they offer this type of coverage.
Is broad form insurance more expensive than standard policies?
Yes, broad form insurance generally comes with higher premiums and deductibles compared to standard policies. The added coverage for less common risks contributes to the increased cost.
Is broad form insurance available for homeowners?
Broad form insurance can also apply to homeowners’ insurance. It may extend coverage to less common risks like damage from specific natural disasters or unusual events. Homeowners should inquire with their insurance providers about the availability and details of broad form coverage for their policies.
Can I switch from a standard policy to a broad form policy mid-term?
Switching from a standard insurance policy to a broad form policy mid-term can be possible, but it’s important to discuss this with your insurance provider. There may be specific conditions and considerations to be aware of when making this transition.
Are there restrictions on who can purchase broad form insurance?
Broad form insurance is typically available to a wide range of individuals and businesses. However, the eligibility criteria can vary by insurance provider and the specific type of coverage being sought. It’s advisable to consult with your insurance company to determine if you qualify for broad form insurance.
Key takeaways
- Broad form insurance offers extended coverage beyond basic insurance, protecting against less common and potentially significant risks.
- It may be included in a standard policy offering or available as a rider, with higher premiums and deductibles.
- Broad form insurance can be tailored to specific needs, making it a valuable choice for those who require added protection.
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